How a CMA Can Make You Money On The Sale of Your Home

A well-prepared Comparative Market Analysis (CMA) is an important first step in determining how to price a home for the market. It gives a property owner useful information about how the home compares with recently sold properties as well as other relevant homes in the area. But choosing a list price involves more than looking at comparable sales. Days on market, current competition, buyer activity, and the potential impact of an appraisal can all play a role. This article explains how a thorough CMA can help you consider these factors and develop a thoughtful pricing strategy before your home goes on the market.

A CMA is a document that real estate agents develop to help sellers determine an appropriate listing price for their home. It contains information about comparable properties, current market conditions, and other factors that can help you decide how to position your property when it goes on the market. When prepared by an agent who understands both how to attract buyers and how to analyze a home’s potential market value, the CMA can be a valuable tool for developing a pricing strategy designed to support your goals.

Some CMAs focus primarily on properties currently listed or under contract in the immediate area. While those properties provide useful information, their asking prices don’t necessarily tell us what buyers ultimately will pay. A more complete analysis also considers factors such as how long comparable properties were on the market and, when available, the relationship between their original list price and final sales price.

The preparation of a thorough CMA by an experienced agent includes research and analysis of data on comparable properties in the same area that:

• recently sold and closed
• are currently under contract
• are actively on the market
• were listed but did not sell

In addition, a CMA may include information about Days on Market, the relationship between list and sales prices, and key property features. By examining data on homes similar to yours, we can develop an informed estimate of how buyers may view your home in the current market.

Days on Market can be a useful indicator when evaluating pricing. If a property remains available noticeably longer than comparable homes, buyer activity may begin to decline and buyers may wonder why it hasn’t sold. That doesn’t automatically mean the price is the problem, but it can be a reason to reevaluate the property’s pricing, condition, presentation, competition, and overall positioning.

Recently “Closed” properties are particularly valuable when developing a pricing strategy because they show what buyers actually agreed to pay in recent transactions. They can provide important guidance when deciding how to position your property so it attracts attention without unnecessarily lingering on the market. Recent comparable sales are also important to appraisers, although the specific properties and information considered will depend on the property, market, and appraisal assignment.

There are also “Pending” or “Under Contract” listings that indicate a buyer and seller have reached an agreement but the transaction has not yet closed. These properties can tell us something about which homes and price ranges are attracting buyers, but the final sales price and complete terms generally aren’t known until the transaction closes.

Similar properties that are “Active” on the market also provide useful information, particularly because they represent your current competition for buyers. How long those homes have been listed can provide additional context. Properties that have remained on the market longer than comparable homes may signal that buyers are not responding to the current price or positioning. In that situation, the seller should consider adjusting the price or evaluating other strategies that could make the property more competitive. Newer listings, meanwhile, deserve attention because buyers may be comparing them directly with your home.

Another useful category is listings that were offered for sale but did not sell, including “Expired” listings. There can be many reasons a property fails to sell, but these listings can provide useful clues about pricing, condition, presentation, timing, or other factors that didn’t resonate with buyers. Understanding how your property compares can help you avoid similar challenges.

If your buyer is obtaining financing, the transaction will typically involve an appraisal ordered by the lender. Pricing a home with current market data in mind may reduce the likelihood of a significant difference between the contract price and appraised value, although an appraisal can never be guaranteed. If an appraisal comes in below the contract price, it may lead to additional negotiations, financing considerations, or delays depending on the terms of the purchase agreement. To learn more about options that may be available following an unfavorable appraisal, read this article.

With all of this comparative information in hand, sellers can make a more informed decision about the initial list price. A home that is positioned competitively has a better opportunity to attract buyer attention and showings. Depending on market conditions and buyer demand, strong interest may also create the potential for multiple offers.

Pricing strategies can vary tremendously based on the property and current market conditions. A thorough CMA gives you a stronger foundation for making that decision, while attracting property showings becomes the next important step. Along with a well-prepared CMA, these articles can help you better understand how to price your home according to the supply and demand of homes in your area and make the most of showing your property.

When you are ready, I will use these concepts to develop a well-prepared CMA that gives you the information and perspective you need to make an informed decision about the initial price position for your home and how best to compete in the current market.