What is a Comparative Market Analysis? (CMA)

What is a Comparative Market Analysis is a question we get a lot from people. If you haven't bought or sold a home before or if it's been a while, it may not be a term you are familiar with. 

What is a CMA?

A Comparative Market Analysis (or Comparable Market Analysis) estimates the market price of a home based on similar, recently "sold" homes in the neighborhood or area. 

A real estate agent will prepare the report using the data from the local MLS. They will look in the same area or neighborhood to see what price other, similar homes have sold for within the last year but preferably the last 6 months or so. 

When we say similar, we need to find properties that have the same basic characteristics like: 

• Size of lot
• Whether it is a Single Level or Two Story Home
• Foundation Type (basement, crawl space, slab...)
• Number of Bedrooms and bathrooms
• Square Footage

With this information, the agent will now look to see what updates or improvements the sold homes have and compare that to your home. They may make adjustments in price for the improvements. 

They take this information (what the market is telling us it will bear) and create a report. It includes the basic information about your home and also the "comp" homes. It also calculates the median and average list price, sales price, and sold price for each of the homes. 

The agent will also look to see what similar homes are pending and active on the local MLS to get an idea of trending prices. 

Sellers and a Comparative Market Analysis

For sellers, this helps the agent recommend a listing price that falls in line with the market. The best price to list your home at is not too low but, more importantly, not too high for the local area. If the price is too high, your home may sit and become market worn. When this happens, you may receive lowball offers or no offers at all. 

Buyers and a Comparative Market Analysis

For buyers, a CMA helps verify the market value of a home. You and your agent can use it to come up with a competitive offer that will be taken seriously while not going overboard and paying too much. 

CMA vs Appraisal

A CMA is NOT an appraisal. It is a tool to help us understand what prices a local market will bear, currently. 

An appraisal is an in-depth report a lender orders when they are underwriting a mortgage loan. It is completed by an unbiased, third party. An appraiser will use the same data an agent uses as well as a cost approach. 

A CMA will give you an idea of what an appraiser may value your home at so you can price it right for the market or ensure you aren't paying too much. 

The Evelo Team Agents, serving Metro Indianapolis, use CMAs to help both their buyers and sellers. It can be a bit tricky but our experienced agents know it's vital to offering on a home and pricing a home. 

CMAs do not cost money - it's a free service we are happy to give to our clients.  Call us today to set up an appointment with one of our agents. 

We don't want you to overpay for a home or price your home incorrectly. Call us now -  317-863-9011