First, the Competitive Market Analysis is all about you. What price do you need to price your house at in order to be “Competitive” in the marketplace?
Second, it’s about the “Market” and third it requires thorough and competent “Analysis”. Proper interpretation and implementation of those two factors in the pricing process are critical if you want to sell your property for the highest dollar feasible in the shortest time possible.
The problem with computer-generated CMA’s is that they fail to consider the entire market and they do no analysis of the properties being used to arrive at a value for your property.
The Market Price for your home is obtained by first identifying recent sales of properties that are closely similar to your property…regardless of whether that sale was within the Realtorsystem (MLS) or a private sale. It’s up to the person performing the analysis to determine if the sale was “arms-length” or a reflection of the low or high side of the market. Direct sales (without representation of an agent by one of the parties) are a part of the market and must be considered when estimating the value of a property being analyzed. The decision to discard the sale should come only after analyzing it to determine whether it is a reliable indicator of value. Under no circumstances should the preparer add a percentage to the sale price to equalize the assumed lack of a commission.
Analysis of the sales means getting reliable information about each of the properties used in the report, breaking the property down into its basic components, and finally coming to logical conclusions about what the seller and buyer agreed to when they established the final sale price.
Preparation of a Sales Grid. After analyzing several sales, the preparer decides which properties are most comparable (usually 3 to 6) and compares those properties with yours to come up with a market-supported value.
Sounds like a lot of work, doesn’t it? Yes. But it’s not too much when you consider the fact that we’re probably dealing with your largest single asset. Before deciding on a listing price for your property, ask the agent how he or she arrived at the value. If they can’t, or won’t, produce a CMA that features Market Analysis as a significant part of the process, thank them for their time and call someone else who is able to start your business relationship off in a professional manner.
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