A Comparable Market Analysis is an analysis that your qualified agent puts together for a particular locale that you are thinking of buying in.
The CMA is especially useful when it’s time to put in a bid for a home as you and your agent can see comparable houses in the area and what they went for.
The pertinent information on a typical CMA is generally as follows for each of the homes listed:
- Street Address
- Total Number of Rooms, number of bedrooms, and number of baths
- Square Footage
- Age of the Property
- Listing Price of the Home
- Original/Old Price if Home has been sold/closed
This information will be available for a number of various homes in the area, including the one you are interested in; on average 5-10 other homes, similar in size and type should be listed (if possible) for the area of interest.
While each CMA can have its own look they’re easy to decipher and pretty simple. Keep in mind that what they don’t tell you is the condition of the house listed; so while one house may be listed at the same square footage of another but sold at a ridiculously low amount there could be a variety of reasons. If it was a recent sale your agent may recall that particular home should they have had any reason to check it out for other clients or such but for the most part the listing will give you very good information to guide you and your agent on how to place an offer on the home you’re interested in.
While each home is different in its own way, knowing what local houses have sold for or are also on the market for and being able to compare them size for size, room for room will help you to see if the home you’re interested in is being offered at a fair price or if they’ve over-inflated the price. Your agent will work with you to explain what to look for and what differences matter and which things to compare.
Getting a general idea of what the homes around the area have gone for is not necessarily a clear cut picture because a three bedroom house listed at one price may not be even close to the same style or type of house you’re looking at with three bedrooms. One home may have sold on the high end while another at an amazingly low price; but what doesn’t show up on the CMA is that the seller who sold for thousands others in the area may have been in a position where they needed to sell and sell quickly.
What the CMA does offer is a general idea of whether your home is priced fairly and how much you can expect the seller to go down on price. Some of the most pertinent information provided by the CMA is that it offers exclusive information telling you what other homes have already recently sold for in the area.
It doesn’t matter so much what other homes are listed for because they can put any price on a home. What matters is the price homes are sold at in the area and this is going to be one of the most valuable pieces of information you can have. This tells you what others have been willing to pay in this area and what lenders are willing to finance.
One thing to keep in mind, and once again strengthens the fact that you should really use a Buyer’s Agent, is that if you find the house on your own or by visiting an open house, the agent representing the seller will most probably not pull up a CMA for you. The seller’s agent is there to accommodate the seller, not you, the buyer. They are there to help the seller get the most money possible for their home and offering up a CMA for the area could provide a conflict of interest. However, this listing is completely available to your own Buyer’s Agent and all you have to do is tell your agent that you’ve seen this house and are very interested for them to be able to pull up a CMA for the area. Chances are, if your agent is on the ball and working for you and this home meets the criteria you’ve already told them you’re looking for, they probably found it for you and you’re not wasting your time hitting up random open houses over the weekends.
You’re leaving the footwork up to your buyer’s agent. But if you found the home by chance just pick up the phone and give your agent the information. They should be back in contact with you shortly after your call and provide you with all of the information you need with the CMA.
You also have to remember that if you accidentally overpay for your house in a strong appreciating market, the market will eventually help you make up for your mistake; but if you do so in a declining or flat market you may end up holding a financial disaster that’s costly to the end.
The final solution is that paying close attention to the current market, paying close attention to the information provided on the CMA, and listening to the guidance of your Buyer’s Agent will help you from having to worry about being taken for a ride on the financial market of the Real Estate roller coaster. Be smart and utilize the CMA to its fullest potential; along with keeping your agent working hard for you to make sure you get the best deal possible. Those three little letters, C-M-A, are your ticket to offering the right price and getting the best deal possible with the help of your agent.