Pricing Your Home - Why a Comparative Market Analysis Is Crucial

After spending many years studying the local area market, comparing it with the national market, and reviewing recent sales data, I have come to understand that pricing a home is more of an art form than a science. In this blog, we will look deeper into why a Comparative Market Analysis (CMA) is vital when setting the selling price for a home.

When it comes to pricing, there are lots of opinions but only one set of facts. I work with my clients to examine the facts of record to determine the most effective pricing strategy to obtain the maximum price possible. Price can sometimes be a moving target. That’s why it is so important for me to understand what the market is doing and how the market is currently trending (shifting up, down, or staying flat).

Price is determined by what a buyer is willing to pay for a home. Ultimately, at the end of the day, the market price is set by the buyer. Therefore it is imperative for me to dig and discover precisely what buyers are currently paying for a home as similar to my client’s home as possible.

In my practice, I use a large pool of information to determine what buyers are currently willing to pay for a home. By also looking at the market trends in a neighborhood, I am able to work with my clients to determine whether it makes more sense to sell now or to wait.

Comparative Market Analysis

A Comparative Market Analysis, CMA for short, is an extremely helpful tool that I use to determine what the market is saying. The CMA is a side-by-side comparison report of homes currently for sale and homes that have SOLD in the same neighborhood or area as yours. I will typically include new listings (for sale), pending sales (under contract), closed sales (solds), and expired listings (failed to sell).

CMAs can vary widely depending on the knowledge, skill level, and experience of the agent inputting the search parameters, as well as the data fields that are chosen. This is a delicate and critical job that will help a seller achieve maximum success. You do not want to trust getting this information from the wrong agent, and you certainly don’t want to trust an online source that spits out un-scrubbed and unverified data.

Because I work and live in the local area, I have had the opportunity to become intimately familiar with our local area neighborhoods.

So what does that mean for you? That means that every week I am gaining more experience that I can put to work for my clients. This puts me in the best position to help educate my clients on what the market is doing, how the market is trending, and how to get the most for their home in the least amount of time. Achieving these kinds of results does not happen by chance. I am very purposeful about achieving the successful sale of every home I list. I also want to net my clients more than they would get by listing with anyone else.

Creating a Comparative Market Analysis

In order to get the most accurate pricing data and net my clients the most money, I have purchased and use the most sophisticated software systems in the industry. After starting with the right tools, I then examine the data using my experience, taking the following factors into consideration.

When building a client’s CMA, I endeavor to use comparables from the surrounding neighborhood. Additionally, I also pull a report of every home that SOLD on a client’s street in the past year so that I can review some specific trending data.

• Size - Generally speaking I try to keep the comparable properties to within 10 percent of the size of my client’s home.
• Age - When aggregating the data, I will endeavor to select comparables that are the exact same year built as my client’s home, or within just a few years.
• Other Details - There are quite a few other parameters that I search through in order to get the most accurate results, including the number of bedrooms, bathrooms, garage spaces, living areas, number of stories, and more.

After I compile and aggregate the data, I painstakingly go through each comparable property and review the photographs and property descriptions. This helps me assess the condition of each property to see if they are aesthetically and physically comparable with my client’s home. This exercise helps me better drill down and select the best comparables. I will sometimes drive through my client’s neighborhood and make a visual analysis of comparable homes.

Analyzing the Details

Once I have completed a CMA, the next step is for us to analyze and review the data together with my client. Then together we can take the critical step of setting the selling price. When it comes to pricing, market trends are constantly changing. Working with the wrong agent will cost you time, and aggravation and you could be leaving money on the table.

Tips like this and many more can be found in my e-book, The Essential Handbook for Selling Your Home. For a free, no-obligation copy please email me or send give me a call at (775) 525-0309.

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