Pricing Your Home
Comparative Market Analysis and Appraisals
What are comparative market analysis?
A comparative market analysis or a CMA is a process your real estate agent performs in order to get a good idea of an appropriate listing price for your home. A CMA is typically a free process that is offered by your listing or buying agent. A CMA evaluates recently sold homes that are similar to yours (these are called comps).
What is an Appraisal?
In an appraisal a qualified appraiser creates a report based on a visual inspection, using recent sales of similar properties, current market trends, and aspects of the home like square footage, amenities, floor plan, etc. to determine the property’s value. An appraisal is an unbiased professional opinion of a home’s value.
Who conducts a CMA and what do they consist of?
Real estate agents are the ones who conduct CMA’s. Real estate agents gather all of their information from the multiple listings service (MLS), which essentially pools information on all for-sale listings from other agents. Since the MLS is only available to real estate agents, which is what makes selling your own home difficult. When agents do a comparative market analysis, they look for homes that are similar to yours in size and features. The CMA lists information on current properties on the market, pending properties, as well as sold and expired properties. The CMA also lists a low, median, and high price for your home as well as an estimated average number of days on the market. A CMA is not an exact science, but it can get you a pretty accurate result of what a good listing price is.
Who hires Appraisers?
Appraisers are usually hired by the buyer, but as a seller, you can also hire an appraiser, but the buyer usually does so to protect the lender from handing the borrower more money than the home is worth. The lender does this because the home serves as collateral for the mortgage, so if they give the borrower too much money then they will not be able to sell the home to recoup the money they lent if the borrower defaults. As a seller if an appraiser comes back low usually means that you may have to lower your home’s price to get it sold, it can also cause the buyer to delay or even fall out of the contract.