Inherited property can quickly go from financial boost to a major headache.
What is a comparative market analysis (CMA)?
Comparative market analysis, or CMA, is the examination, often in the form of a report, of various price points of similar properties sold within the same area. While the average buyer can compare prices herself when considering purchasing a property, real estate agents perform more thorough comparative market analyses to help clients.
A comparative market analysis tells a prospective home buyer or seller how much properties in the same area cost. Standard comparative market analysis reports contain information on active real estate listings, pending listings, sold listings, properties that were withdrawn, canceled, or are off-market, and expired listings. The CMA can help determine fair market value.
While CMAs are usually completed by a real estate agent, the buyer or seller herself can compile one thanks to online real-estate websites. However, an agent might have access to additional information that could be more accurate and thorough. The agent may produce a CMA between two and 50 pages long.
Properties in an area may have similar square footage, age of construction, amenities, upgrades, and condition. A comparative market analysis will help potential buyers and sellers look of homes with similarities in these characteristics, but it will also account for differences between homes and how those differences affect the selling price of each home.
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Comparative market analysis example
A family is considering a four-bedroom, three-bathroom, 2,000-square-foot home on a quarter acre of land, a real estate agent will most likely perform a comparative market analysis on several similar properties that sold in the same neighborhood or subdivision. If the home under consideration is listed at $300,000, and the other homes within the comparative market analysis are priced on either side of that amount, the agent will consider location, home size, property size, and amenities to decide if the price is fair.