The first step to selling your home is determining how much it is worth and what people are willing to pay for it. Although there are many online calculators, the best way to accurately determine your home’s value is to work with an expert – a real estate agent who can develop a customized CMA.
So, first things, first. What is a CMA? A comparable market analysis (CMA) is a report that real estate professionals generate to determine the value of a home by finding comparable properties using an industry resource called the Multiple Listing Service or MLS (hey, that’s us!).
A CMA compares your home to other homes that are similar in build, age, features, upgrades, square footage, lot size, etc., to your home. In this report you will see how your house stacks up against other houses in your neighborhood or community that are currently on the market or have recently sold.
Determine the value of your home
In the age of Kelley Blue Book, eBay, Facebook Marketplace, and many other do it yourself selling websites, you may have gotten used to and even comfortable with selling belongings on your own. And due to vast digital and social advancements, you may think pricing a home would be just as simple. With various online estimation tools available it can’t be too hard to find the value of your home, right? Well, yes and no! Of course, you can and should do your own research when looking to buy or sell your home but determining the value of your home is not as simple as it sounds. In fact, many sellers struggle with remaining unbiased when evaluating their home which can lead to future challenges.
Benefits of a CMA
No two houses are alike, in fact, that’s why pricing a home can be so challenging. The benefit of working with a real estate agent who can create a CMA is to simply increase the likelihood of selling your home faster. By comparing other like homes, you are able to identify a price range in which your home best fits. You and your agent can then determine if your home belongs on the higher end of that price range or the lower end.
This is often where sellers go astray. If priced too aggressively, a house can sit longer on the market. When you price too high many potential buyers who would have seen your new listing will not, especially if they have saved searches created to only see houses in their preferred price range. If a CMA determines the best value for your home would be approximately $500,000 – $515,000 and you decide to price at $525,000 all the buyers who would have seen your home at $515,000 will now be filtered out. The goal of listing your home is to get your property in front of as many buyers as possible as soon as possible!
Another issue sellers face when pricing a home aggressively is having to reduce the listing price not once, not twice but possibly three-plus times to get the home value correct. At this point, your home may have been on the market for weeks, even months. Many buyers may write off your property once they see multiple price reductions and assume something is wrong with the home. Others may have seen your property floating around the MLS for some time now and are more interested in the fresh listings popping on the MLS daily. Now you are competing with people thinking there is something wrong with your home and new listings simultaneously. Talk about an uphill battle!
Of course, on the other hand, if you price your home too low it may move fast, but you may have undervalued your home, leaving potential money on the table. And who’s to say which situation is worse, but personally we’d rather not go through the Goldilocks of home prices and simply go with the home price that is just right from the beginning (which is the purpose of a CMA)!
- A CMA is not the same as a home appraisal and cannot take the place of one. A home appraisal must be conducted by a licensed appraiser.
- If your real estate agent provides you with a CMA they are not urging you to move. Your agent may send you a CMA report because they simply want you to know that houses like yours are in demand! Receiving a CMA from your agent is a way to be aware of how your home is performing against other homes currently on the market, even if you don’t have plans to sell just yet. However, if they know you are on the fence between staying or selling, they may suggest a CMA to give you a little nudge.
- An online valuation tool is a great resource to use in addition to a CMA but it should not replace, we repeat, it should not replace a more accurate, in-depth CMA generated by a real estate expert.
How to request a CMA
If you are currently working with a real estate agent or have worked with one in the past you can reach out to them and request a CMA.
If you are not currently working with a real estate agent you can ask family and friends for a referral or visit a trusted, reputable source to find a real estate agent in your area. A great place to look is on REcolorado.com, where you can view the profiles of thousands of agents ready and willing to provide a CMA for you.
After you contact your agent, they will come to your house and do a brief walk-through, rest assured your house does not need to be in ‘open house clean’ condition but it should be in a condition for your agent to get a good assessment. Update your agent if you plan on doing any major fixes to your home, as this will factor into the value, or wait until all projects are complete.
After their visit, you should receive a CMA report showing you a detailed breakdown of your home compared to others on the market. It’s as simple as that!
Originally published in August 2020.