The Comparative Market Analysis (CMA)

A comment often heard among friends discussing real estate is, “we got the home for “X” thousands less than the seller was asking.”   A question rarely asked is, “what is the home worth?”   We ask that question and prepare a market analysis (CMA) because if you buy a home for $10,000 less than asking but pay $5,000 more than the home is worth you’ve made a mistake.

Michael D. Holloway, President Homebuyer Assc.

The Market

Any home available to, RE/MAX, Prudential, Coldwell Banker or any other large real estate firm is available to Homebuyer Associates because all Realtor firms rely on the Multiple Listing Service (MLS) to locate listings (a “listing” gives a company the right to offer a home for sale).

The MLS database is a list of all Realtor homes on market in a four-county area.  By MLS rules any home listed for sale by an MLS Realtor must be placed in the database within 24-48 hours.  Agents who claim to have “early” access to homes going on market want to create a sense of panic.  Panic is not good for you.  Be careful, don’t buy a home based on panic or emotion.  Better to buy a home based on information.

We also search for homes that are on the market as For Sale by Owners.

Pricing

Sometimes home asking prices are set artificially due to competition for listings among real estate companies.  Every real estate company prefers to have their lawn signs in the lawn.  Sometimes, to get that lawn sign in the lawn, a false promise is made to a seller as to the value of the seller’s home.  Sometimes the seller has a false sense of value which leads to an artificially set price.

Don’t be caught up in someone else’s false promise and pay more than you should for a home based on asking price alone.  Better to obtain a CMA and buy your home based on market research – based on information, not emotion.

Value

Information is the key to making a sound real estate purchase.  When buying a home consider:

• The number of days the home has been on the market;
• The number of homes for sale in a 3-5 block radius
• Select the three most recent comparable sales in the past 12 months for the area;
• Determine the “ballpark” age of the big ticket items (roof, furnace, etc..) which affect value; (your inspector will provide a detailed opinion)
• Try to determine what the seller paid for the home;
• Note the condition of the home and area homes relative to area values;
• Determine the average sale price of similar homes for the area;
• From this information draft an offer based on information, not emotion.