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What is Comparative Market Analysis and Why is it Necessary

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You might have received a postcard or flyer from one of your area’s local real estate agents with an offer to provide a document that’s known as a Comparative Market Analysis or CMA. It will tell you how much your home is worth, prepared by agents in order to determine the most accurate listing price possible for a home by comparing it to homes in the same neighborhood that have sold recently. 

These reports analyze active, inactive, pending and sold listings in order to provide the most accurate results. Active listings are a seller’s competition but aren’t necessarily indicative of market value as a homeowner can list his or home at the price they’re hoping to get – of course, that doesn’t mean it will be realistic. As an example, the seller or the seller’s agent may look through properties among Dallas real estate in a particular neighborhood to get an idea of what the best asking price might be, but that doesn’t reflect the true market value until those homes have actually sold. During a buyer’s market most will sell for less than the asking price, but if it’s a seller’s market, they usually sell for more. 

If you’re selling your home on your own, FSBO, you can get your own comparative pricing information using a site like homegain.com for free. You’ll be able to scan lists of homes in your area that have sold, or you can request a report that’s prepared by a local agent who will contact, and likely try and win your business. If you can deal with that, it can be a good way to get the information you need without hiring a real estate agent. 

No matter what you decide to do in the end, having a CMA is a must. 

Why?

You’ll Get Important Insights into the Market

While it’s been a seller’s market for a while now with inventory shrinking, that will likely continue for at least the short-term. When selling a property in this climate it often inspires a bidding war which means it’s a must to understand market trends before responding to an offer. While that won’t help you price your home, it will provide a feel as to the prices you’ll be competing against. 

It Will Help You Price Your Home to Sell as Slowly or as Quickly as You Want

A CMA will provide an upper and lower price limit based on the analysis. If you choose to price on the higher end of the range, you’ll probably have to wait longer to sell it. This may be a good idea for sellers who aren’t in a rush, especially in the middle of a seller’s market. There will probably be fewer bidders, but those bidders are likely to be more serious too. If you’re like most sellers, you probably want to sell your home as soon as possible, which means choosing a price at the lower end of that price range will help to make it happen. You’ll get more buyers considering your home as they’ll consider it a bargain compared to similar homes nearby.

An Understanding of Buyer Behavior

A CMA will reveal whether or not buyer interest is driving up prices. You’ll learn what potential buyers are truly interested in purchasing and how much they’re willing to pay and to borrow, essential information when pricing a home.

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3 comments:

MELODY JACOBS said...

I got to learn something new dear. Thank you
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Trina M said...

You're so welcome! :)

Ruth Josey said...

So funny that I was having this conversation the other day with a neighbor in Rockwall (you know where that is). We realized since the huge tax assessment jump that our properties underwent this year, nobody really had any idea of what something will sell for, and his house just went up for sale. There was nothing in the area to really compare it to for pricing. The realtor even had difficulty coming up with a figure. Thanks so much for the great information!

Ruth
www.VogueFauxReal.com

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