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What Does CMA Stand For in Real Estate?
Find yourself wondering what CMA stands for in real estate? CMA or comparative market analysis is a tool that can help you set a price for your home.
Madison Clifton
Jul 2, 2019
When selling a home one of the first things you think about is how much you can get for it. A CMA helps you figure that out. Now you might be wondering, what does CMA stand for in real estate? CMA stands for comparative market analysis, and it is a pricing tool. It is used by agents to help you determine a realistic price your home could sell for on the market.
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What is a CMA?
A CMA is an assessment of your home and all of its attributes. It puts a monetary value to every aspect of your home. Everything from your remodeled bathroom, to how big your backyard is. This is done so that in the end you can get an estimate of what your house could sell for in the current market.
A CMA is able to accurately give you an estimate of what your home could sell for because it is created by finding comparable properties to yours and finding out what they sold for. When an agent begins creating a CMA, they start by finding homes similar to yours in the same geographical area that have sold in the last three months. When looking for comparable properties, agents will try to find homes that match your home’s number of bedrooms, number of bathrooms, and qualities like a finished basement.
It is very unlikely that a home exactly like yours would have been sold recently. Due to this adjustments will need to be made. Once similar properties are found and an estimate price range can be established, adjustments will be made to fit the qualities your home has. Creating an effective CMA can become complicated quickly. There are many steps to creating a CMA, but an experienced agent will know exactly what to do.
Included in a CMA
To truly get an accurate estimate of the price of your home it is beneficial to have everything taken into consideration. Below is a list of potential attributes that could be included in a comparative market analysis.
Interior
- Square Footage
- Bedrooms
- Bathrooms
- Type and Condition of Basement
- Quality of Kitchen
- Flooring
Exterior
- Quality of Roof
- Siding
- Windows
- Yard Size
- Fence
- Parking
Additional Attributes
- Proximity to School District
- Age of Water Heater
- Age of Heating and Cooling System
Comparable Property Selections
The accuracy of the CMA is completely dependent on quality comparable selections. When and where the property was sold are major factors in choosing a comparable selection. The real estate market fluctuates quickly, especially when considering time and location. Therefore, to get a dependable price estimate for your home, it is necessary to find recently sold comparable properties that are as geographically close to your house as possible.
But it is not enough to just find comparable properties that were sold recently and close to you. If a house five miles from you sold yesterday you may be thinking it would be the perfect property to use for a comparable selection. Not exactly. If that house that sold yesterday has four bedrooms, three bathrooms and a fenced in backyard, while your house is two bedrooms, one and a half bathrooms with no yard space, that is not necessarily a good choice for a comparable selection. While adjustments can be made it is important to keep in mind that qualities of comparable selections need to match up to qualities of your home.
Estimated prices have the potential to vary drastically depending on what an agent chooses as comparable selections. When finding a listing agent, sellers will often go with the agent that gives them the highest estimated price for their home. Be wary of this though. Often times when a price seems to good to be true, it is.
Adjustments
Having the attributes of comparable selections match the attributes of your home is a vital factor is creating a CMA. Unfortunately, finding a home that exactly matches yours that sold recently and in the same area is frequently impossible. Due to this is it is necessary to make adjustments.
If your home has three bedrooms and a comparable selection has two bedrooms, then money would be added to the price the comparable selection sold for to make up for your home having an extra bedroom. This is done for any qualities of your home that differ from the qualities of the comparable selection, except for square footage. Square footage is done at the very end.
Once three or four comparable selections have been chosen and had adjustments made to them, the sold price is divided by the square footage. The price per square footage is then averaged between the comparable selections. The averaged price per square footage is then multiplied by the by the square footage of your home, this number is your estimated selling price.
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Deciding on a Price
When an agent performs a comparative market analysis it is extremely helpful in determining a price to sell you home for. Estimating a market value for a home is a difficult task and is best done by someone who has experience.
Hopefully by now the question “What does CMA stand for in real estate?” has been answered for you. Understanding what your agent is doing when they are helping you sell your home makes you more confident in the process, taking some of the stress of selling your home away.