Home Worth: What is a CMA?
Chances are you have seen the abbreviation CMA in conjunction with the question "What is your home worth?"
CMA stands for comparative (or often competitive) market analysis, which is an evaluation of a property's value based on local market data. This evaluation is usually prepared by real estate agents when looking to determine the potential sales price for a property on the open market. Agents also prepare CMAs to help their buyer clients decide on an appropriate offer price.
When providing a CMA, agents analyze listing and sales data for comparable properties in the area. Specifically, this includes information about:
- Properties that have sold and closed (transferred ownership)
- 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
What does this information tell agents about price for the subject property of the CMA?
Homes for which the sale has either already closed or is pending serve as the most reliable indicators of the price a similar property is likely to bring. Information about homes currently for sale helps agents gauge the pricing position of competing properties. And expired listings can shed light on pricing the market will bear, especially if those listings were priced well above comparable homes that have sold. Of course, you need to remember that there may be other factors involved in the failure of those properties to sell.
Once analyzed, this information gives agents a picture of the local marketplace. How accurate that picture is depends in part on the quality of the data used to prepare the CMA. Ideally, properties used for comparison should be as similar in physical characteristics as possible to the subject property. Also, the sales data should be recent. Sales occurring no longer than six months ago are a general rule of thumb used many agents.
What can you expect to see in a CMA?
A completed comparative market analysis is presented in the form of a report. It capsules information about the subject property and the comparable properties used, including average days on the market for the area compared and an estimated market value of the subject property.
Please keep in mind that a CMA prepared by your provision of the above information is a ballpark estimate. To complete a truly accurate CMA, it is imperative for the agent to visit the subject property to determine condition and other characteristics that may add or detract from the value. If you would like to meet with an agent to determine the value of your home, please contact us.