In order to begin the selling process one needs to do a market analysis on their property in order to set a listing price. A comparative market analysis (called a CMA for short) is a property analysis that real estate agents use to help sellers and buyers determine the market value of real estate. A CMA is not an appraisal, but it does contain some of the same types of information that you’ll find in an appraisal. Before you read further about the CMA process it is important to understand the meaning of market value since that is the objective with a CMA.
Market Value, Defined
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.
Please note that according to this definition, market value is the most probable price (not the “highest price”) that the property should bring (not “will bring”). Analysis is a matter of estimation and likelihood, not certainty.
Basic Criteria for Property Analysis
Whereas assessing value is a little bit science and a little bit art, it is important to start with the most scientific approach based on evidence in the marketplace before one considers any other aspect of pricing. The following are the basic criteria for property analysis:
- Construction Quality: Is the quality of the workmanship and the materials good, average or poor?
- Age of the Home: How old is the home is its overall condition good, average or poor?
- Size of the house (square footage): This includes the improved living area, excluding the garage, basement and porches.
- Interior Layout: Is the floor plan functional and convenient? This criteria changes with standards of modern living. For example and open floor plan will be more in demand than small chopped up rooms.
- Number of Rooms: Total living space affects value as well as number of rooms. For example, some homes don’t have a dining room. Some homes have a family room as well as a living room.
- Number of Bedrooms: Number of bedrooms has a major effect on value.
- Number of bathrooms: A full bathroom has a wash basin, toilet and a bath tub (with or without a shower), a three-quarter bath has a wash basin, toilet and shower (no tub), a half bath has a wash basin and a toilet only.
- Garage/Carport: An enclosed garage is considered better than a carport. How many cars can the garage accommodate? Is there storage and work space available in addition to parking? Is it possible to enter directly into the house from the garage protecting one from weather?