A CMA (Comparative Market Analysis) is the universal approach used by Realtors to determine the fair market value of a given property. It is widely used to help determine the listing price of a home.
Most often, the end result of the CMA is a price range. The Realtor will then help the sellers determine how to price the home within said range based on the neighborhood, amenities, market performance, etc. This approach is favorable in that it allows the local housing market to tell us what the home is worth based on supply and demand.
The process starts with the subject property (your home). We want to know as much as possible about your home before taking further steps. Ideally, your Realtor will have already seen your home in person to verify the info and assess its condition/updates. For those in the industry, public records are easily accessible and generally have all of the information we need.
For the task of locating the comparables (known as “comps”), a Realtor will be looking for homes (generally 3) that compare to yours and have recently sold. It’s important that the comps have sold recently if we want to be accurate in considering your homes’ value. If the info is outdated, your price will be too.
The homes we have chosen need to be comparable to yours in location, square footage, number of bedrooms, bathrooms, lot size, year built, etc. These comps should be within your neighborhood or very close by since different pockets and areas can see price differences based on demand.
Once comps are gathered, we will pay close attention to what the similarities and differences are of each house compared to yours. A general range in price will be established quickly and will be narrowed down as we consider price differentiation.
Your CMA isn’t likely to point you to a specific price, though you will have a price range of fair market value. From there, we weigh on the market activity and consider pricing from a marketing perspective to determine the listing price.