CMAs: What are they and when are they used?
by Andrew Sundell
What is a CMA?
A comparative market analysis is used to determine a home’s market value by comparing it to other similar homes (“comparables”) in the area that have recently sold. Whether you are buying or selling a home, it is important that your agent know how to identify worthy comps for the subject property. Determining the worth of your biggest investment should not be taken lightly as the price can drastically affect listing performance, or the offer price.
CMAs for Sellers & Buyers
In residential real estate sales, the CMA is critical on both the buying and selling side!
- CMA’s for Sellers
- For sellers, if your agent provides you with incorrect comps that overvalue your property, the listing performance will suffer. Your house could end up lingering on the market which gives buyers more leverage during negotiations. And even if you receive a higher-than-expected offer, if the purchase is contingent upon mortgage financing, an appraiser will need to verify the value before the lending institution will approve the loan.
- Appraisers must adhere to strict guidelines set by their governing bodies when selecting comps for subject properties. Generally, appraisers look for similar houses that have sold in the past 90 days within the immediate neighborhood (or area). If there are no comparable properties within the 90 day time frame in your immediate neighborhood, the search time frame and search area will be expanded until suitable recently sold properties are found.
- It is imperative that your CMA is comparing apples-to-apples. For example, let’s say you live in a condo community that has 2 different styles of 2-bedroom condos. The first style is on the ground level and has 8’ ceilings and a concrete pad patio; the second style is an upper level with cathedral ceilings, skylights, a deck, and a loft. Although these are both 2-bedroom condos in the same community, they are not comparable. The design and layout of these two condos differ enough to drive a noticeable difference in value…
- CMA’s for Buyers
- For buyers, a CMA is equally as important. It is not uncommon for listings to be overpriced – many sellers inherently overvalue their house because of their familiarity with the work that went into it. In addition, there are many listing agents who incorrectly select comps which support an inflated value. Make sure your buyer agent can identify when a home is overpriced, and provide accurate comparables and an explanation to justify an offer price.
- If you’re taking out a mortgage to finance the purchase of your home, a 3rd party appraiser will be used to assess the value. The lending institution will only approve a loan up to the “appraised value”. If the appraised value comes in lower than the agreed upon purchase price, the listing agent usually provides comparables to the appraiser to try and persuade him to adjust the value up.
The Final Verdict?
As you now know, the CMA plays a vital role on both the buying and selling side of residential real estate transactions. If you are skeptical of an agent’s ability to run a CMA or his/her familiarity with the local market, do yourself a favor and interview additional candidates. With your house being the biggest investment you’ll ever make, you’ll want to be completely confident that your agent has the skills to get you a good value!
[optima_express_featured sortBy=”cn” propertyType=”SFR,CND” displayType=”grid” resultsPerPage=”3″ header=”false” includeMap=”false”]
Sundell Realty Blog Posts
Sundell Realty is an innovative real estate service provider servicing Montgomery, Bucks, and Philadelphia Counties in PA. We are also licensed in NJ and service all of South Jersey and Ocean City!
We use the latest technology and innovative techniques to help our buyers and sellers achieve their real estate goals. Request more info
This error message is only visible to WordPress admins
Error: No feed found.
Please go to the Instagram Feed settings page to create a feed.
Contact
Categories
Categories
- Home Buying (3)
- Home Selling (9)
Recent Posts
Home Selling 101: What Does it Cost to Sell Your House?
What Fees & Charges Can I Expect as a Seller? by Andrew Sundell Home Selling 101: Seller Charges & Reimbursements …
Seller’s Property Disclosure (PA): Explained
Sundell Realty’s Guide on the Seller Property Disclosure form in PA by Andrew Sundell What is a Seller’s Property Disclosure …
Waiving Contingencies To Strengthen Your Offer: Good Idea?
Is Waiving Contingencies A Smart Decision? by Andrew Sundell The Situation: Explained Lately I have seen and heard a lot …
Please follow and like us:
