On Real Estate & More – April 2018
As a real estate broker, I spend a lot of my time looking at homes and conducting research. One of the things I do most often is preparation of a comparative market analysis (CMA), which is a document that helps determine the selling price range of a home by comparing it to recently-sold homes in the same area. A CMA is not the same as an appraisal, which is performed by a licensed appraiser. To create a CMA, the broker looks at the price of recently sold, active, and pending listings that are similar (comparable) to the home they’re trying to sell or assist a client with their home purchase. The two general circumstances where running a CMA is necessary include when you want to tell a homeowner how much their property is worth in the current market and to help a buyer determine if a home they’re interested in is priced well or not.
The first step in preparing a CMA is to assess the neighborhood. While you won’t really be able to assess the home until you’ve seen it in person, things you want to look for include proximity to parks, schools, highways, industrial facilities, etc. and any significant curb appeal advantatages.
The next step is to see what information you can find out about the property online. Next is to utilize Multiple Listing Service (MLS) or other CMA software to look for comparable listings and come up with a rough idea of the home’s value. The main items you’re looking for are homes that have sold, expired, have sales pending, or been listed in the past six months. In addition, look for homes with the same amenities, number of bedrooms and baths, within 300 square feet, in the same neighborhood, same or comparable school zones, similar lot size and built within 10-25 years as yours.
The next step is to take the selling price of the comparable homes you’ve chosen and divide it by their square footage to arrive at the price/per square foot for each comparable home. Although that process will provide a fairly accurate estimate, there are other factors to consider in doing a CMA, including the condition, additions and upgrades, landscaping, and home values—are they trending up or down and more.
Knowing a home’s value allows you to evaluate what you can afford and determine if a listing is priced appropriately and decide how to price your own home.
Sandy J. Brown lives in Jacksonville and is a real estate broker and land use planner with Windermere Van Vleet Jacksonville. She can be reached at sandyjbrown@windermere.com or 831-588-8204.