Even in a seller’s market — such as the one Texas currently enjoys, with multiple offers on almost every home — starting the selling process with an appropriate listing price is key to a faster, smoother sale. However, for most sellers, finding out how much their home is worth remains something of a mystery. Help is at hand. One of the most valuable services a real estate professional can provide is a comparative market analysis (CMA). Here’s how a professional comparative market analysis can affect the listing price for your home.
What is a CMA?
The goal of a CMA is to estimate the value of a home for sale relative to comparable properties in the area. A real estate agent will look at recently sold homes within a specific location, examine several factors, and run the data through various tools to reach a fair market value. Bear in mind that performing a CMA is not a standardized process. Each real estate agent will have their go-to tools and data sets, but whatever the methodology used, it’s undoubtedly one of the services to ask your agent about before selling your home.
Why a CMA is not an appraisal
A real estate agent performs a comparative market analysis at the start of the sale process to establish a home’s value range. By contrast, an appraisal is performed by a licensed appraiser, typically after contracts have been exchanged. An appraisal is not intended to set a value range. Rather, its goal is to determine an appraised value for a specific property — and the service is one of the additional costs that homeowners should factor into the sales process.
How real estate agents carry out a CMA
There were 393,615 homes sold in Texas in 2020, and each sale generated valuable data that helps provide market insight. Each real estate agent will have their preferred tools for compiling their competitive market analysis. But perks of the profession include access to the Realtor’s Property Resource (RPR), a national database of home sales, and the Multiple Listing Service (the MLS), which logs recent sales in the area. Agents may also look at tax records, which are useful for establishing the initial parameters but tend to be lower than the current market value. Since popular real estate websites are typically benchmarks that most buyers will cite, real estate agents will often include them as references, but with the caveat that price ranges are often significantly different to the final sale value.
What factors influence the CMA?
The comparative market analysis report will show the home for sale alongside a selection of recently sold homes in the local area. These key factors will usually define the value of each home:
- Square footage. Note that as the square footage goes up, the price per square foot comes down.
- The number of bedrooms and baths, one of the reasons why adding an extra room can bump up the sale price.
- Age, both the year built as well as the time since the initial listing.
- Construction and style, including the design, materials, number of floors and even outside amenities (pool, yard etc.) and curb appeal.
- Neighborhood. What are the amenities? Are there any HOA rules in place? How are the schools rated?
Performing a comparative market analysis in one of our Texas metro areas is relatively straightforward, with lots of recent data to refer to. Establishing a benchmark is more challenging in rural areas without many homes for sale or for recently remodeled homes.
Finding the sweet spot
Hitting the right price valuation when a home debuts on the market is just one of the things that can help it sell faster. For the seller, obtaining a comparative market analysis helps provide context. After all, a home is personal, and the seller will know each room and quirk intimately. But personal value doesn’t always translate into current market value. Many buyers are searching according to the amenities — schools in particular — that a neighborhood offers. The CMA helps match buyers with the best options within their price range and location and allows sellers’ homes to spend the shortest possible time on the market. Without a comparative market analysis, a home for sale may be priced too high and spend longer than necessary on the market — or possibly not find a buyer at all — or be priced too low, leaving proverbial money on the table.
Always ahead, the expert agents of Briggs Freeman Sotheby’s International Realty employ mobile-friendly, interactive CMAs that can be viewed anytime, anywhere — and that are always updated with the freshest MLS data. Getting a home’s price right from the outset with a professional CMA is just one of the many ways a Briggs Freeman Sotheby’s International Realty agent can translate their local knowledge and expertise into tangible value for you.