If you are selling your home you might have already had your home’s value appraised with something called a comparative market analysis, or CMA for short. Regardless of if you hired a professional, or if you decided to do it yourself, you need to conduct a CMA because it is an important report to give you information on the home’s current market.
Comparative Market Analysis defined
A comparative market analysis is a special report that can be 2 to 50 pages describing how the home was evaluated as well as a breakdown on which comparable homes were used to evaluate your home. Sometimes a real estate agent will do this for free in order to gain your business and other times you will have a home inspector do this during the appraisal. Regardless of how you have it done there are a couple of things that all CMAs are going to have in common.
These are the homes that are currently on the market that are similar to your home. These are good listings to know about but it does not always reflect what you should price your home at as the seller. As an example if all of the homes get sold at 15% less then their asking price in your area then obviously the active listings are not going to give you a true representation of the market value of your home. Active listings will only tell you what the current prices of the houses that buyers are seeing right now in your area.
A pending listing is a house that is still being sold but it is under contract at the moment. These listings can be helpful because it tells you what a buyer has agreed upon, and what the house will probably sell for, but sadly this is not information that you are usually given access to until the house has actually completed the sale process. However if you have a home that is listing much higher then the current pending listings it probably means that you are going to be in for a long wait if you hope to sell your house for that amount of money.
This type of listing is the most reflective of the home’s true market value and it is going to be what the home appraiser uses when they give you your home appraisal. If you look at comparable homes sold in the last 3-6 months you will get an accurate reflection of the current market value. If you look at the listing price to the final sale price you will get a good idea of how the current market is faring and what type of price your house is probably going to end up selling for.
What is this thing called a comparable home, you may ask? This is a home that is similar to your home in size, condition, and location. To get the best, and most accurate, values you should compare homes with the same number of bedrooms and bathroom, as well as similar square footage, and in the same neighborhood as the home you are selling. If you have upgrades that your neighbors do not they will increase your home’s value, and likewise, if everyone has something that you do not then they will decrease the value. The age of the home is also taken into account because an older home does not carry the same value as a new construction. But if you have a home in a historical district it can actually fetch more money then a newer home in the same area.
Because of all the information you can see what most people do not take on this task alone, and instead prefer to have a professional help them with it, but the more you know about how to figure the value of your home the more you will swing the odds in your favor to get the best price.