CMA - Elements of a GOOD CMA

When an Agent comes to your home for a Listing Appointment, the core of activity is based on what we in (Licensed Realtors) refer to as the Comparative Market Analysis (CMA).  To the inexperienced Sellers out there, here's a general idea of how a CMA works.

It's YOUR home versus EVERY other comparable property in the immediate area!!  As Agents, this is how we help our Sellers establish a sensible Asking Price.  Recently sold listings, expired listings, and active listings all need to be taken into account while ascertaining an reasonable price range.  It goes without saying that with the large quantity of properties on the market today it is more than necessary to take great care in compiling a "Good" CMA.

Here's how each listing type affects the CMA of YOUR home:

Active Listings - This is your competition!  The strategy is basic - every effort should go into out-pricing your competition, taking into account the subtle differences in value between your home and the rest. 

Expired Listings - Learn from the shortcomings of others!!!  These homes never made it to closing because they were almost certainly priced incorrectly based on market conditions.

Recently Sold (Closed) Listings - Properties that sell are obviously the successful ones!!  The goal is to match these listings as close as possible for a couple of reasons.  First off, this is the strongest, prediction of for how your home will perform in the current market (the number of showings).  Second, appraisers are going to look to the sold properties FOREMOST to ascertain an appropriate value for YOUR home.  If YOUR home is overpriced, it won't appraise and most likely won't sell.

With Pending Sales you don't know what the Seller accepted as an offer, or if the sale will actually close.  For this reason I don't include them in my CMAs.  If warranted, I treat these listings as Active, but most likely won't include them in my value.

So how many months back should a Comparative Listings go, and how far out does the immediate area extend to?  Taking a page out of the book of licensed appraisers, I stay within 3 months of my current listing date.  I narrow down the list of comparables to a radius of no more than 1 mile from the home I'm trying to derive value for.  In some instances I can exceed the 1 mile radius, but only if there are not comparables. Your Buyer's lender will require the same criteria of the appraiser evaluating your property.  It keeps the information relevant and updated.

It's my job as the Listing Agent to take ALL of these factors into account to derive an appropriate asking price that will get your property sold for the most amount of money it the current market and in the least amount of time!  In some cases, it's enough to make you want to pull your hair out!  But, Sellers, rest assured that with a professional on the job like myself, you won't be steered in the wrong direction!  The CMA is a vital step in the sales process to help you meet YOUR goal!