A CMA is short for Comparative Market Analysis.  The CMA provides a home seller with the framework in which to make a realistic pricing strategy to attract buyers to their property.
A quality CMA by a Real Estate Professional is invaluable tool for pricing a property and should consider the following:


Properties that are currently available on the market.  These properties should be similar in size, age, and within a certain proximity from the seller’s property.  This gives sellers an idea of the competition but does not indicate what the market will actually bear.  Just because you say it is worth X amount doesn’t mean the buyers agree.


Comparing at least three to five recently sold, similar properties, demonstrates what buyers have actually paid for similar homes.  This is an example of what the market will actually bear in terms of price paid.


Demonstrates what buyers have NOT been willing to pay under current market conditions.


Looks at the number of properties on the market in a particular neighborhood over a given time period and how many of those houses are selling each month.  The Real Estate Professional will be able to calculate the months of supply in a particular neighborhood and give you an estimate of your likeliness to sell at a specific price point.  For example: If neighborhood X has 10 months of supply then if you are priced in the top 25% of the area you will have a 5% chance of selling.  This method considers location and velocity as a way to determine a pricing strategy.

It is important to remember these facts when pricing a house for sale:


With the ease of internet shopping you can be certain that now, more than ever, Home Buyers compare properties.  They will not pay more for one home than they could pay for another similar property.


The price which your house is marketed must attract enough attention among buyers to generate showings and interest.  If you are priced too high then buyers in your actual price range may never see the house.  Over pricing leads buyers to think the seller might be unwilling to negotiate so they won’t even take the time to look or make an offer.


If someone is using a lender then the property will be assessed by an independent appraiser to verify the sale price is at fair market value.  Therefore, if the property fails to appraise at fair market value, it will either force the buyer to make up the difference in cash or cause the sale to fall through.

Ultimately, your Real Estate Professional will help you determine a pricing strategy but you will decide where to price your property.  The higher your urgency to sell and the current market will help set the tone for your pricing.

Something(s) to remember:

With the market as challenging as it has been in the last few years, many Real Estate Professionals refuse to take listings that are significantly over priced.  Aside from concerns of disappointing the seller when the property remains on the market, it also is a large cost for the Real Estate Professional.  Each property a Real Estate Professional lists for sale creates an expense for them.   As you can imagine any smart business person can not operate under a continual loss.

Also remember when you interview a Real Estate Professional that their job is to help you sell your property.  That requires an honest assessment of your homes value, even when that message may be hard to hear.  If your agent is unwilling or unable to give you tough feedback from the start, then I would question how they will handle tough negotiations when the time comes.

"What is a CMA?" - By admin - - No Comments