Understanding Your CMA
A Competitive Market Analysis (CMA) is an important tool to use and understand when pricing and buying homes. In central Indiana, only a Mibor-licensed real estate agent can perform one because the data in the report only includes homes listed on Mibor’s BLC multiple listing service program - and information provided by realtors regarding sold homes.
What exactly is a CMA? It is a comparison of prices of recently sold homes that are similar to a listing seller’s home in terms of location, style and amenities. Generally how it’s done is that the subject home’s neighborhood is searched for similar homes (active, sold, pending, expired, etc.) in the last 6 months. A quick report will show you pertinent information about other homes such as size, number of bedrooms and bathrooms, price and price per square foot. As long as homes and lots are similar, the price per square foot of the SOLD homes is a good indicator of where other similar homes will be sold at.
CMAs are a very good indicator of pricing in most cases, but some provide more reliable information than others. The smaller the area searched, the more similar the homes and the more recent the data, the more reliable the information. Knowing this, you should ask anyone doing a CMA for you:
-Did you just search my neighborhood?
-Some areas in my neighborhood vary greatly (custom/non-custom, age of homes, etc.), did you just include the areas most similar to mine or did you search the entire neighborhood?
-Did you look at the homes individually to ascertain that they were good comparables?
-What is the time frame of the search? Six months to a year is ideal.
-Were there foreclosures or short sales included in the search?
-Were there closing costs paid that weren’t taken into account?
-How reliable do you feel like this CMA is?
We provide a CMA to our clients, but often we will recommend a fair market value appraisal when we don’t feel that there are enough similar homes that have been recently sold. Obviously we want our clients to get the most money possible, however we do want you to sell. We value our success rate and since we don’t work on commission, we tell you what you need to hear, not what you want to hear!
If you decide to consider real estate agents, it is a good idea to meet several and ask for CMAs. You will most likely hear different suggested listing prices. An inexperienced agent may not know how to properly do a CMA, or an unethical agent can skew the data simply by modifying the search. You’ll want consider an agent’s motivation when you receive CMAs. A newer agent or any agent in today’s buyer’s market may desperately need the commission and advise you to price lower for a quicker commission. While another agent may tell you what you want to hear knowing that he or she needs the listing for advertising and leads. Pricing your home correctly is crucial to selling. Make sure you trust the person advising you.
Tags: appraisals, cma, home pricing
September 25, 2008 5:55 pm 
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