Comparative Market Analysis (CMA)
Wikipedia defines a CMA is "an estimate of the home's value compared with others in it's local market". You may say, that sounds like an appraisal, well....yes, sort of, but the difference is that a CMA takes actively listed properties(supply) in to consideration as well as sold properties. An Appraisal uses only sold properties to determine a value based upon actual sales, not supply. If you are planning to sell your home, it may be beneficial if you have recently had an appraisal comepleted, but ask your local real estate agent if that is an accurate guage of value and they will give you a different story. We have been selling West Metro real estate for years, and where it is very important to look at the value of recently sold properties to determine value, it is almost as important to look at the current supply of comparable homes available as well as the comparble homes in pending status(under contract but not closed yet). Here is a brief explanation about how each property status; Active, Pending & Sold is used to determine Market Value:
Home that are actively available on the local market. These are valuable to determine what the competitive landscape is for comparable available homes and what potential home buyers will be looking at. But keep in mind, this is not a value determining factor, even though a seller can ask whatever they want for their home, it doesnt mean a buyer will pay it.
Pending sales are homes that are currently under contract with a buyer and are awaiting closing. This is commonly referred to as "in escrow". Pending sales do not disclose the sales price, but they do give an indication of at what price the home was listed at when a buyer was procured, thus allowing an agent to determine if the market is trending up or down in value or if current market time is increasing or decreasing. Both are valuable to positioning your home accurately against your competition.
This is the good stuff....the actual sales data of comparable homes within your local market. These are the homes that are most alike to your home, and have sold within the past 6 months. Why only 6 months? Because the Minnesota real estate market changes, and values can trend up or down with a calendar year, and if we use old data, our values will be inaccurate. Study these, they dont lie, this is what a buyer has actualy paid for comparable homes.
Cancelled or Expired Listings
I didnt mention these above, since they are not always included in a CMA, but they do deserve a look. If a home was listed and didn't sell, what do you think the reason was? Condition?....Sometimes. Ineffective marketing? Many times. (We have sold many homes that other agents couldn't for the same price or higher than the other agent had it listed for previously), but most times it comes right down to value. The home did not show enough "value" at it's previous list price, and buyers were not willing to pay what they were asking.
We have been selling West Metro homes for years and know our market, and this allows us to accurately convey values and marketing strategy to our clients for effective marketing of their property. The ultimate goal is the highest sales rice in the shortest marketing time. If you intend to sell your home soon, please complete an Instant Home Valuation and one of our Pros will reach out to you with any questions or call us at 612-845-7890.
Zachary Adams | Realtor | Wright Sherburne Realty | 612-845-7890