I Need A Market Analysis, or CMA or something
A real estate market analysis is a realtor’s objective opinion of what your home would likely sell for. Which factors would influence your home’s market value? Typically, an analysis will include all homes sold within one mile of the property in question. Factors such as location, density, size, and turnover in your neighborhood will help determine value.
The most common type of market analysis is a comparative analysis. A real estate agent will conduct a study of homes that have sold within the past 3 to 6 months and look for factors that would help determine the comparative market value of your home.
Location is the most important factor in determining your home’s value. What other homes are selling for in your neighborhood sets both the floor and ceiling for potential sales.
Similarity is the second determining factor. In high-density areas, agents will select the homes that are most similar to yours. This includes elements of home size, age, lot size, finish out, condition of upkeep, remodeling, floor plan, parking, and any number of unique qualities that may be available in your neighborhood. When there is a shortage of similar homes sold within the radius, the agent may include less similar homes but make adjustments for their improvements, or lack thereof.
Other factors may include, but are not limited to, the type of home, fees for ownership, topography, and the reputation of the builder. The more factors your agent utilizes when conducting your comparative market analysis, the more accurate your market value estimate will be.
Comparative or Competitive?
A Competitive Market Analysis is useful when a pricing strategy is needed for the actual listing. Your real estate agent will pull a list of homes that are currently for sale. Using the same factors as the comparative analysis, an agent should be able to recommend a listing price that will give your home a competitive advantage.
The recommendation might be above, below or between other homes that are in the same neighborhood. It might also be wise to consider homes for sale in other similar neighborhoods that are located in the same school district. Furthermore, an agent should check for builder incentives of any new constructions in the area.
Using a competitive analysis strategy gives you, the Seller, a good idea of how your home will compete against other homes that are available on the market. Where you position your home amongst the competition will vary depending largely on your goals for selling the home.
But What About an Appraisal?
It is important to note that neither a Competitive nor a Comparative Market Analysis is the same as an appraisal. An appraisal can only be completed by a licensed appraiser and is a more in-depth study of your home’s worth. The Waco Home Team offers both a Competitive and a Comparative Analysis for your home, as part of the sales preparation process, up front, without charge. An appraisal may cost anywhere from $300 to over $1000 depending on your property and the availability of data.
An appraisal is a valuable tool when there are not enough similar properties to complete a solid market analysis. An appraiser takes any remotely comparable sales and uses replacement values of the differences to adjust the price up or down, finally arriving at your property’s worth.
So, What’s the best strategy for me?
Ultimately the person who decides the market value is the buyer who will use any number of variables, both factual and emotional, to make an offer. Pricing a home correctly for a given market is critical. An appraisal is, still, only a tool to start the process. The Waco Home Team offers 3 distinct pricing strategies based on the data available in both the comparative and competitive analyses. The Waco Home Team will use their professional expertise and market savvy to help you attain your goals.
All we need now is to know where you are going after the sale. If you are unsure about finding your next home, Don’t fret! Click here to read our blog on releasing the fear about moving in the right direction.