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Understanding Comparative Market Analysis (CMA) - An Overview

Understanding Comparative Market Analysis (CMA) - An Overview

Comparative market analysis sounds like an intimidating real estate term that may put the home buyer off. However it is really very simple. It is an assessment of the price of comparative sale prices of properties in your area that have been sold recently. This is a review that real estate agents undertake as part of their responsibilities to the client. It helps the client determine what to ask for their house if they are putting it on the market - or what to offer in a bid if they are buying.

No two properties are ever alike

Of course, no two properties are ever alike - even condos that appear alike usually have nuances that are unique to each unit. That means the real estate agent must be adept at adjusting the CMA to take this into account and ensure the fair offer or sale price. A CMA falls short of being a formal appraisal done by a professional, and the latter is something the homeowner should not rule out in the process of buying and selling a home. However, it is definitely a starting point.

An example of a real estate offer based on a CMA

For example, a couple recently decided to make an offer on a two bedroom condo with two and a half baths. It has a gas fireplace, new appliances and overlooks a wooded lot in the back. They tender an offer of $225,000. This decision was based on the CMA performed by the real estate agent who priced out three similar properties in the area. One was the exact size that sold for $233,000, a second had an additional bedroom and went for $241,000 and the third was located in a less desirable part of the development and earned the seller $227,000. Remember, when making an offer you generally bid low so there is some room for negotiation and counter offers. In the buyer's estimation - as well as the real estate agent's - this was a fair offer worth considering.

Buying and selling action in a particular area may be slow - limiting CMA

Sometimes the buying and selling action in an area is slow for any number of reasons. Perhaps the weather is bad, or a major company just announced a round of layoffs. These tend to negatively affect the home buying and selling market. When this happens the real estate agent may only be able to consult a list of properties that are on the market and their asking prices because there are no authentic comparative sales available. This is not unusual nor is it to be avoided. There is value to understanding the comparative prices of properties in the area you are looking to purchase even if sales are slow.

Information is power to the home owner. Visit our website to learn more about home buying and home ownership.

About the Editor

Arun Kumar

The old adage is that hindsight is always 20/20. Seven years ago, I embarked on a journey as a serial entrepreneur. I built my very first business in India and later expanded to the US. In weathering the ups and downs of several business brands, I discovered my passion for the digital platform.

I could see a huge opportunity to connect home buyers and sellers with quality information and service providers. That led to the birth and co-founding of

Arun Kumar
Co-Founder of HFMA

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