How does a CMA affect your pricing strategy?
When I come to your home for a Listing Appointment, a major piece of the consultation is the Comparative Market Analysis or CMA. A Comparative Market Analysis is how I, as your consultant, help you to establish a realistic asking price for your home.
A CMA tells us the current market price range for homes in your area. Remember, ‘The Market’ is an impartial but crucial indicator for determining your asking price. Buyers don’t know or care about how much money you need from the sale of your home! However, they do know your home’s current market valuation based on CMAs from their realtor.
A CMA takes into account three factors to help determine what the current real estate market in your area considers a fair price. Here’s a brief overview of how a CMA works…
When you sell your home, it’s a competition between YOUR home versus EVERY comparable property in the immediate area. Recently sold listings, expired listings, and active listings all need to be taken into account to establish your asking price.
Let’s go over how each listing type affects your Comparative Market Analysis…
Active Listings – This is your competition. The idea is to ‘out-price’ your competitors by addressing subtle differences in value between your home and the rest of the competition.
Expired Listings – Learn from the folly of others. These homes never made it to closing because they were most likely priced incorrectly—although, in some cases, serious defects were present. Or they could have been distressed properties.
Recently Sold (Closed) Listings – the successful listing have made it to closing and are ‘sold’. Matching these listings as close as possible to your home is a helpful indicator for how well your home will perform in the current market.
How far back should the Comparative Listings go?
Generally it’s preferable to stay within three months of the current date. Since most bank appraisals are limited to sales within the past three months, it’s best to follow their lead. Home values have changed quickly in this market, so lenders say that sales prices farther back than three months are irrelevant.
And how far does the ‘immediate area’ extend?
Generally the list of comparables encompasses an area within one square mile of your home or less. The objective is to keep your CMA information as relevant as possible by only comparing properties similar to yours.
The CMA is an excellent tool with which to gauge the current pricing of homes near yours. With that knowledge we can determine a fair market price for your home that will ensure a quick and satisfactory sale for you!