For those that aren’t familiar with a CMA or comparative market analysis, this is a valuable tool that real estate agents use to determine the asking price of homes for sale and comparing the best priced homes to buy. A properly priced home will sell quicker and the chances of it appraising for the sale are much better. The CMA is the tool that is used the most for pricing and offers.
A real estate agent will recommend an asking price to a seller, but they don’t always listen. When the real estate agent has studied the CMA, they are looking at homes comparable that are listed or have recently sold, which is what an appraiser will do. How a home compares to the competitors in the market can determine whether the home should be priced higher or lower.
For example, if two homes are identical, but one home as a new roof and the other has an older one, an appraiser will subtract value from the home that has the older roof. On the other hand, there are some improvements that might not add a lot of value, but will have buyer appeal, for example a built-in swimming pool. While there is some value added, it is not as much as the cost of the pool, which some home sellers don’t realize.
When you consider how a CMA or comparative market analysis is used in the buying and selling process, a price should be set close to what the report reflects. Because it is based on the current market place, it is not a whim that a seller has, when it comes to making profit from the sale of their home. Realtors might not want to waste time on a home that is priced too high, both in listing and in showing, so it is important that homes are priced based on the marketplace and their competitors.
As a seller, you need to pay close attention to what the CMA reflects, when it comes to setting your asking price. If the home is worth the price, buyers will be interested and your home will sell close to it. You will want to make sure that the home is in the best shape you can afford, including curb appeal, cleanliness and make sure it is de-cluttered to show the space.
As a buyer, a CMA will reflect the market price that appraisals will be based on, so if you fall in love with a higher priced home that isn’t in line with the pricing of the market, it is going to be reflected in the appraisal and you may need more money to make up the difference at closing. The best way to avoid disappointment for the seller and the buyer is that homes are priced in line with the market and that is what the CMA can show. If they aren’t in line with the CMA, you may be pricing yourself out of the market and wasting your time, if you are a seller and if you are a buyer, overpaying for a home is not something you will want to do. A real estate agent can help you find a CMA on any home you want to buy or sell.
Click here for a Boulder real estate agent who can help you with a CMA on your home, or a home you want to buy.