How A CMA Can Help You
Although reports can vary from a two-page list of comparable home sales to a 50-page comprehensive guide, the length and complexity of the CMA depends on the real estate agent's business practice. However, standard comparative market analysis reports contain the following data:
1. Active Listings - Active listings are homes currently for sale. Such listings are not completely indicative of market value because sellers can ask whatever they want for their home, but they will give you an idea of averages.
2. Pending Listings - Pending listings are formerly active listings that were under contract. These homes have not yet closed, so they are not yet a comparable sale. Unless the listing agent is willing to share information about the pending sale -- and many are not -- you will not know the actual sold price until the transaction closes. However, pending sales do indicate the direction the market is moving.
3. Sold Listings - Homes that have closed within the past six months are your comparable sales. These are the sales an appraiser will use when appraising your home for the buyer, along with the pending sales (which will likely have closed by the time your home is sold). Look long and hard at the comparable sales because those are your market value.
When examining comparable sales remember to choose homes that most closely resemble your home. It is difficult to compare a tri-level home to a single-story home. Select the homes from this list that are mostly identical to your home in size, shape and condition, such as: similar square footage, similar age of construction, similar amenities, upgrades and condition and similar location.
4. Off-Market / Withdrawn / Canceled - These are properties that were taken off the market for a variety of reasons. This number can be used as a high water mark. The reason these homes are removed from the market may be due to prices being too high. The median prices of this group will almost always be higher than the median prices of comparable sales. However, listings cancel for other reasons such seller's remorse, the DOM was too long, repair requests, or the seller fired the agent.
5. Expired Listing - This group will reflect the highest median sales price because they did not sell and were probably unreasonably priced. Some of the expired listings could also show up as an active listing, listed by a new agent at a new price. Listings also expire because they were not aggressively marketed or because the home was in need of repairs.
A real estate agent's knowledge of the local market can affect the accuracy of a CMA, particularly in a neighborhood with a lot of variability in the housing stock. Unless the agent has actually seen the comparable listings, he or she may not draw the correct conclusions. So pick your agent carefully and you too can benefit from the value of a CMA.
Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal service. For more information, please visit www.electronicappraiser.com.