What Is a Comparative Market Analysis?
Thinking about selling your Atlanta home? Wondering how much your property is worth in the current real estate market? This can be a bit challenging because your home’s value can be fairly subjective. So many factors going into determining the fair market value of a home.
However, there is a science to pricing property. That’s why Atlanta real estate agents conduct extensive research. This is known in the real estate industry as a Comparative Market Analysis or a CMA.
What Is A Comparative Market Analysis (CMA) in Real Estate?
A licensed real estate agent uses a Comparative Market Analysis as a tool to help estimate a specific property’s fair market value. This is done by evaluating similar properties that have sold recently in the same local area.
Creating a CMA for a client can be exceptionally challenging because a number of other significant factors must be considered to determine how much a specific piece of real estate is worth on the current market.
When a person is selling a home, the factors they typically consider are:
- Overall square footage (living space)
- Number of bedrooms
- Number of bathrooms
But these factors are just the beginning when creating a CMA. Some other factors your real estate professional must also consider include the property’s:
- Lot size
- Overall condition
- Local real estate market conditions
- National real estate market conditions
How Is a Comparative Market Analysis Prepared?
To conduct a CMA, your agent much search for homes in your local area similar to yours that have sold recently. They must be as similar to your home as possible for a valid CMA. These homes are known as comparable sales or comps.
Your agent will use the comps to determine fair market value based on a sales comparison approach. The overall idea is that you can figure out how much a specific home is worth by determining how much a similar and equally desirable home would cost to buy.
The Rule of Three
When your agent prepares your CMA, the first step is to find three comps that have sold within the past three months. If none have sold within that time, it may be extended out to the past six months.
- All 3 homes must be similar and located as near each other as possible
- After the 3 comps are chosen, each one is examined thoroughly to pinpoint their differences from your home
- After itemizing the differences and their costs, each comp’s sales price is adjusted to determine their individual costs if they were almost identical to your home if listed on the current market
Do You Need A Comparative Market Analysis?
Even if you’ve already had an appraisal, you need a comparative market analysis to determine your home’s value in the current real estate market. An appraisal determines value based on pre-determined factors. But that value can fluctuate based on other local and national factors.
A CMA helps sellers determine the most effective asking price possible based on what current buyers are willing to pay for similar homes in your area. It’s also a reliable tool to help you negotiate the asking price if you have multiple offers.
Looking for a reliable Atlanta REALTOR® with access to market sales data to help you through the convoluted process of preparing a comparative market analysis? Get assistance from your local New Age Realtor, Kereen Henry by completing the form below for your free Atlanta home CMA.