weiss colorThe ABCs of CMAs

By Michael Weiss – Agent/Relocation Specialist

Doing a comparative market analysis is an important part of both the selling and buying processes.  However, I feel as though many people that I’ve worked with have questions regarding what exactly goes into a comparative market analysis (CMA), so I’ve decided to take this opportunity to describe the analysis further.

Two important factors: Comparable homes (COMPS) should be in the same geographical sub-market and sales data meant to ascertain value ought not be more than 120 days old if possible.  The markets move up and down each month and values can fluctuate depending on the time of year and outside economic factors.  And as we all know (especially in St. Louis), simply crossing a street can see home values soar or plummet, so location is king.

Of course proximity and time are only two factors.  Simply put, the more similar the properties being compared, the better.  Here are some other factors that are often given prominence in a CMA:

  • square footage
  • number of bedrooms
  • number of bathrooms
  • lot size
  • garage spots
  • cosmetic & systematic upgrades

Look to see that the home fits comfortably into its price range and is not an outlier compared to other homes that have recently sold.

Notice how many days it took to sell similar homes and how far off the original asking price they had to come down to sell.  Where homes sell quickly, you can expect people to want to gain entry when it’s time for you to sell.

Ultimately there is no crystal ball as to whether a real estate deal will work out in the end financially, but if you look at real estate values over the last 100 years the average appreciation of a home was right at four percent.  Homes have different values to different people and it all has to do with a million little factors that play into it.

Remember, for buyers a home’s value is based on what they believe is within reason depending on their personal circumstances, financial and otherwise. Meanwhile, for sellers a home’s value is what someone will offer for it on any given day.  What you should sell it for is a totally different question and can only statistically be justified by intelligent use of COMPS.

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