As a property practitioner, a Comparative Market Analysis (CMA) is one of the most important tools at your disposal. Being able to communicate a property's true market value can convince homeowners on the fence to sell and also help pinpoint an asking price that will find success when the property is listed. Here’s a basic guide if you’re starting your career and a look at an advanced CMA tool you can access to make your CMA reports accurate and easier to send.
What is a CMA?
A CMA assists in knowing a property's market worth by comparing the subject property to similar residences in the area. Property practitioners use this analysis to determine the value of a house by comparing it to other recently sold residences that are considered to be comparable to the one being analysed. These comparable properties, often known as "comps", are picked for their similarities in location, size, features, and market price.
During the process of conducting a CMA, you can gather information on the house being inspected and on other comparable homes. It can typically include details about the property, such as the number of bedrooms, bathrooms, square footage, and any unique features. Moreover, it also gathers information about recent sales in the area, such as the sale price, date, and any important details that can influence the value of the property.
Benefits of a CMA
A CMA report provides valuable insights. For sellers, it can assist with determining fair and accurate pricing, play a vital role in negotiations, and save time instead of relying on guesswork or subjective opinions.
CMA reports also empower practitioners when performing their roles. You can quickly collate vital statistics like the average days on the market for similar homes that will help give sellers a realistic selling time. You can find out what properties are selling quickly and offer advice to sellers on the features buyers might be looking for in properties in their areas. The CMA can also help identify trends and shifts in the local real estate market and can be done by comparing the subject property with active listings. Using this analysis, you can determine if prices increase, stay stable, or decline.
Steps when conducting a CMA
1. Identifying properties: The CMA uses data on recently sold properties to determine market value. Real estate professionals gather information from multiple listing services (MLS), public records, and other sources. You can access information about recently sold properties, including details, photos, and transaction details.
2. Gathering data: This involves collecting data on recently sold properties with similar characteristics, such as location, size, amenities, and market conditions. This data includes price, date sold, property details, and any seller concessions.
3. Determining adjustments: The CMA takes into account any differences in properties to adjust for value. Factors like repair costs, upgrades, and market conditions are considered.
4. Establishing market value: This step involves analysing the data to determine the fair market value of the property being considered. It compares recently sold properties with similar features and considers market conditions.
5. Reports: Your property's values are shown in a clear and simple way. In a typical CMA, you can get a brief overview of the analysis, a rundown of similar properties, and a valuation estimate.
How much does a CMA cost?
The cost of using a CMA tool can vary depending on several factors. The price can be influenced by the complexity of the data required, the level of service provided, and the tool's or service provider's reputation.
Real estate software or platforms offer various CMA tools, ranging from free ones with limited features to more sophisticated tools that require a subscription fee. Some real estate companies may include these tools as part of their total service package.
Send CMA reports that turn data into deals
As a Prop Data client, you can create CMA data and send reports directly from Prop Data Manage. We’ve partnered with Lightstone, a leader in property information, valuations and reporting solutions that enable better business decisions.
While AI has been the buzz in recent years, Lightstone has used AI as early as 2006 to revolutionise how properties are valued. Lightstone’s AI is able to provide daily estimate revisions. It keeps an eye on the property market 24/7, ensuring that the information it provides is as current as possible. This real-time efficiency is invaluable to property practitioners using Lightstone. The AI also consistently delivers highly accurate property value estimates. Moreover, it can handle a wide range of properties, ensuring that property practitioners receive the most precise valuations.
To leverage Lightstone data, sign up for Prop Data’s Valuation Module. It allows you to send automated online valuations using industry-leading data from our trusted partner Lightstone as well as from your own comparable listing databases. It’s an easy way to communicate the right price for your client, quickly and accurately. Customise the presentation format with your own unique layout approach to ensure your brand consistently stands out from the rest of the pack.