How Much is My Home Worth
A Comparative Market Analysis (CMA) is a key tool used by real estate professionals to estimate the market value of a property. It involves comparing the home in question to similar properties, known as “comps,” that have recently sold, are currently listed, or were recently listed but did not sell. Here's how the process typically works:
1. Gather Property Details
Start by collecting detailed information about the subject property:
- Location: Neighborhood, school district, proximity to amenities.
- Size: Total square footage, number of bedrooms and bathrooms.
- Condition: Age of the property, renovations, upgrades, overall condition.
- Lot Size: If it's a house, the size of the lot may affect value.
- Special Features: Pools, garages, basements, or any unique features.
2. Select Comparable Properties (Comps)
Choose properties that are most similar to the subject home, which helps ensure an accurate comparison. Look for:
- Recently Sold Properties: These provide the most reliable data, as they reflect what buyers have been willing to pay recently.
- Active Listings: These show what sellers hope to get, though these may not reflect the final sale price.
- Expired or Withdrawn Listings: These homes did not sell at their listed price, providing insight into overpricing.
The comps should be in the same neighborhood or nearby, of similar size, style, and condition, and ideally sold within the last 3 to 6 months.
3. Analyze the Comparables
Compare the subject property to each comp by analyzing differences in:
- Size: Adjust for larger or smaller square footage.
- Condition: If the comp has more recent renovations, adjust the price downward for the subject property.
- Amenities: Consider features like a pool or modern kitchen, and adjust accordingly.
- Market Conditions: If the market has changed significantly since the comp was sold (e.g., demand has increased), factor that into your adjustments.
4. Adjust Prices
For each comp, make price adjustments based on differences between it and the subject property. For example:
- If a comp has an extra bedroom, you might subtract a set amount from the comp’s sale price to reflect that.
- If the subject property has a newly renovated kitchen and a comp does not, you might increase the estimated value of the subject property.
5. Determine the Value Range
After adjusting the comparable prices, you’ll arrive at a range of values. For example, the comps might suggest the subject property is worth between $350,000 and $375,000. This range is based on factors like the quality of the comps and how similar they are to the subject property.
6. Final Estimate
Based on the analysis and market conditions, select a specific value within the range as the most likely sale price. Often, the final number will depend on factors like:
- Current market trends (e.g., buyer’s or seller’s market).
- How quickly the seller needs to sell.
- The condition of the property compared to the market.
This process helps homeowners or buyers get a realistic idea of a property's market value, often forming the basis for pricing or negotiating a sale. For a FREE Comparative Marketing Analysis, contact Allen Deaver of Asset Realty today.
