Choosing a listing price or an offer price on a home can be challenging since no two homes are identical. Sellers traditionally use a comparable market analysis, or CMA, as a useful tool for determining their listing price. The CMA compares the seller’s home to those that have already sold nearby or are currently on the market. But, CMAs are equally useful to buyers. When you select a home you’re interested in buying, ask your agent to run a CMA for you, as if you were the seller.
Every CMA Is Unique
To make a CMA, your agent inputs search parameters from their multiple listing service database and a CMA software
produces a report containing similar homes that have recently sold or are currently on the market. This type of report is a
side-by-side comparison of price, size, age, neighborhood, days on the market, and other pertinent comparable
information. As a buyer, looking at similar homes in your area can give you a better sense of how quickly homes are
selling, what offers have been accepted by sellers, and more.
Choosing Your Offer Price
Just as a CMA helps a seller choose a listing price, a CMA can help you choose an offer price. A CMA can help you
answer key questions such as:
• How comparable are the other homes to the one you are interested in buying?
• Are the homes you’re comparing of similar age and size?
• Are the other homes in the same neighborhood?
• How many bedrooms and baths do they have?
• Are the homes single story or two stories?
• What size are the lots on which the homes sit?
• Are the homes single-family, townhomes or condominiums?
However, the CMA can’t tell you everything you need to know. CMAs will list the age of the home and the age of recent updates, but beyond that you don’t know how old fixtures or amenities are. The pool at the home you want may be in need of retiling or resurfacing, which can be quite expensive. Or the air conditioner may be close to replacement. For that reason, the CMA should be used as a guide. A CMA can’t tell you whether a home backs up to a highway, whether it’s in poor or good condition, and if it’s been updated and how well. You need to see these homes for yourself, so you can understand the differences in price, features, and location. And that’s where your agent can be invaluable. With his market knowledge, or her neighborhood expertise, your agent can give you the house-by-house information you need to make a better-informed decision.