A Comparative Market Analysis is an essential part of every real estate agent's job. It is one of the tools, but not the only tool, used in helping to help determine the value of a property by comparing it to similar homes that have sold within a certain radius and within a certain school district. A CMA is an opinion of value based on location, square footage and amenities. Buyer's agents also use CMA's to help determine fair market value so their buyers do not make an offer more than the home is worth. Each home that comes on the market actually has to be sold three times: once to the agent, again to the buyer and finally, to the bank appraiser.
Market Evaluation Made Easy
Determining a home's value by using a Market Evaluation takes into consideration not only recent home sales (what happened in the past), homes under contract (where the market is heading) along with homes currently available (competition). Appraisers usually go back 90 days to pull comparable sales and do not necessarily use only the style of home being appraised. Comparables for a cape could include ranches, colonials or splits if the comparing home has an equal number of rooms and square footage. Amenities come into consideration, but not as much as homeowners expect to get back during the appraisal. The true value of any home is ultimately determined by how much a buyer is willing to pay for it, and each buyer sees each home differently. A comparable home on a main road will almost always sell for significantly less because the buyer may perceive the value to be the same as a competing home, mid-block on a quiet street.
What Doesn't Matter in Pricing a Home?
- Seller or agent opinion
- Seller’s monetary needs
Based on a Market Analysis, how long is that value good for?
24 hours
Just as stocks go up and down on a daily basis, so does the real estate market. If your home was listed today for $500,000 and tomorrow 10 houses came on the market similar in size, location and condition for $400,000, your home would need a price adjustment or it will be used to sell other surrounding homes.
If you inherited your home, would you sell it for any amount? Or would you want market value?
Correct Answer – Market Value
The same Pricing Principle applies if you were purchasing your next home –
Based on Today’s Value
How Do Most Sellers Determine Their Selling Price?
- Opinion of Friends and Family
- Internet
- Amount of money needed to move
- Recoup investment of upgrades
- Will move if they get their price
- Amount needed to pay for next home
- Based on what they actually paid for it
- Personal attachments/memories
- Advertised prices
- Neighborhood/Perceived Location
How To Buyers Make their Buying Decision?
- Buyers buy on emotion and then justify their purchase with logic.
- They must have a perceived sense of value based on the current market.
- They compare homes in their price range.
- Buyers will not overpay but will pay market value.
- The average number of homes a buyer sees before making a decision:
12-16 (will they see yours?)
What is the role of a Real Estate Professional?
Margaret Biegelman forms a partnership with her sellers and becomes their Real Estate Consultant. Her role is to be the interpreter of the current market and to provide her sellers with the necessary information needed in order for them to make the real estate decision that is in their best interest. The pricing decision will be based on their desired outcome. It is her job to inform, guide and council the seller during the entire transaction and to follow all the steps and procedures necessary to result in a successful sale.
Contact Margaret Biegelman for a complete Market Evaluation.