Current Market Analysis

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Current Market Analysis or CMA gives an estimated sale price for a property given current market conditions. It's prepared by a real estate agent and it usually comes in report form. Most residential real estate agents don't charge a fee for preparing a CMA, sometimes even referred to as a comparative market analysis, because essentially you’re comparing a subject property to current and previous home sales and on the market homes.

An agent needs to walk through the property in question before preparing a final price range for a current market analysis. If an agent has any experience at all, they should be able to take an address, or name that the property is listed under, and do all of his initial research before visiting the property. After the initial research, they should have a good idea of price range, depending on condition, and then be ready to walk through it. Unless the home is enormous, the agent inspection part of the CMA shouldn't take long, nor does the home have to show like a model home. However, property condition does affect price. So if you plan to do work on the property, let the agent know. The agent will also give you suggestions and first impressions of things you can do to make your home ready for sale.

The agent will research the Multiple Listing Service for information about similar properties in the area that have recently sold. In order to arrive at a current price estimate, an agent should analyze information about listings that have sold and closed, those that are sold but haven't yet closed (the pending sales), active listings and expired listings. This will give you a more accurate price range that the home should sell in and also give you a picture of your competition.

Pending and sold listings give the most reliable indicator of current market price. Active listings are a gauge of the current competition in the marketplace. Expired listings are properties that were listed for sale but didn't sell. Usually expired listings didn't sell because they were priced too high for the market, or weren’t prepared for sale because of the condition of the property and the price that it was listed at for that condition.

The agent then compares the property with listings found in the MLS search and by so doing arrives at a probable selling price. Keep in mind that the price derived from a current market analysis is somewhat subjective. Also, a CMA is not an appraisal. You need to hire a licensed appraiser to complete a formal appraisal, if you need one.

Sellers should have a CMA done before listing their home for sale. It will give you a good indication of how realistic your expectations are, with the price and value for what you think your home is worth.

You may find that you want a CMA even if you aren't planning to sell. For instance, before embarking on a major renovation you might want to know how much you can spend without over-improving for the neighborhood. The agent who sold you the property should be happy to prepare a current market analysis for you if he or she is still active in the local housing market.

Buyers should ask for a CMA on a property they are considering buying, particularly if they are new to the area and haven't had the opportunity to see many listings.

First Time Tip: Regardless of whether you are a buyer or a seller, the agent who prepares your CMA should work actively in the area where the property is located.

The Internet has made it possible for virtually anyone to access comparable sales information. However, this information is usually inadequate without firsthand knowledge of the comparable properties and the local marketplace. Comparable sales online will not give you any mitigating factors of the sale. Was the property distressed? Were there closing cost or membership concessions involved? These are factors that a local agent will know or can find out easily to give you a clearer picture of what the property REALLY sold for.

For example, property upgrades usually have a positive effect on sale price. But if the upgrades are inferior in quality or design they can lower rather than increase the price. Suppose the information on a sold listing shows a remodeled kitchen. Without having seen the property, it's difficult to know how the remodeling affected the price.

Current Market Value Don't be surprised when your current market analysis gives a price range rather than a set price. You're more likely to see this in markets were there are several areas and communities creating variations in terms of property size, age, architectural style and condition through those different areas of the local market. And because other factors come into play such as buyer’s motivation, seller’s motivation and recent sold comps. Sold comparables can affect your home’s market value at anytime.

Ultimately, there are 3 factors within your control that affect your sellability. Price, Condition, and Marketing. Priced competitively with recent sold comps within the specific neighborhood or area and for it's condition. The condition needs to be spotless, impersonal and appealing. And of course, marketing needs to be handled by a professional who knows how to place the property in the right circles and "create a buzz" about this fantastic opportunity that's now on the market. These factors along with buyer’s motivation and recent comps will determine what your home is worth.