Frequently Asked Questions
What is a CMA?
The best method available to home sellers to learn their home's current value so they can select the best sale price is a CMA
If you are considering selling your home or condo, it's not so easy and it's certainly not simple. The value of your home is difficult to predict and the information available to home sellers can be partial at best. Online home valuation sites are a good place to start, but are based on past sales and do not consider current market conditions. Newspaper listings, another popular source for prices, can be inaccurate since asking prices can be biased above market value, and properties can vary dramatically within an area.
The best method available to home sellers to learn their property's current value and price it for sale is a CMA, or Comparative Market Analysis. CMA is the term real estate agents use when they conduct an in-depth analysis of a home's potential sale price in today's market.
When should I ask for a CMA?
Obtain a CMA from an agent before you list your home for sale, in order to avoid listing it for sale at the wrong price. Pricing too low means you'll get less money for your home; setting the price too high means it might not sell at all.
Sellers who haven't yet chosen a real estate agent often ask several agents to complete CMAs so there is opportunity to meet different agents and to see how they work.
How is a CMA prepared?
First, an agent will walk through your home. The home does not have to be in perfect condition. However, property condition does affect price, so if you plan to do work on the property, let the agent know. At this point the agent may recommend improvements to increase your home's value.
Second, the agent will research information about comparable properties in the area, usually using a real estate industry resource called the Multiple Listing Service. This includes:
- Properties that have sold and closed within the last 12 months
- Active listings - properties currently for sale
- Pending sales - listings that have sold but not yet closed
- Expired listings - properties that did not sell during the listing period
Lastly, the agent suggests a probable selling price. Don't be surprised if a CMA results in a price range rather than a set price, particularly in markets were there are price differences due to property size, age, architectural style or physical condition of the property.
You can find out how improvements to your property will impact your sale price at www.homesalemaximizer.com.
What can you expect to see in a CMA?
A completed CMA is presented in the form of a report, which includes the selling price, detailed information about your home, and the comparable properties that were researched to determine its value. Because the price derived from a CMA is somewhat subjective, some agents may be annotated with comments on the perceived selling points your home.
What is the difference between a CMA and an appraisal?
A real estate appraisal is a comprehensive evaluation performed by an independent professional appraiser. With a CMA, the agent's experience in the business and familiarity with the location can affect the accuracy. Typically, CMA's prepared by an experienced agent with excellent local market knowledge will be right in line with a home's appraised value. A CMA can therefore be a very useful tool in a real estate transaction.
How is a home's value determined?
You have several ways to determine the value of a home.
An appraisal is a professional estimate of a property's market value, based on recent sales of comparable properties, location, square footage and construction quality. This service varies in cost depending on the price of the home. On average, an appraisal costs about $300 for a $250,000 house.
A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents offer free analyses in the hopes of winning your business.
You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder or assessor offices, through private real estate information companies or on the Internet.
What is the difference between market value and appraised value?
The appraised value of a house is a certified appraiser's opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process.
Market value is what price the house will bring at a given point in time. Either an appraisal or a comparative market analysis is the most accurate way to determine what your home is worth.
What standards do appraisers use to estimate value?
Appraisers use several factors when estimating a home's value, including the home's size and square footage, the condition of the home and neighborhood, comparable local sales, any pertinent historical information, sales performance and indices that forecast future value. For detailed information on appraisal standards, contact the Appraisal Institute at www.appraisalinstitute.org.
Where do I get information on housing market statistics?
A real estate agent is a good source for finding out the status of the local housing market. So is your statewide association of Realtors, most of which are continuously compiling such statistics from local real estate boards.