When it comes time to pick a price for your listing, most agents utilize something known as a CMA. But what is a CMA and how does it work?
A CMA (or comparative market analysis) is an in-depth study of sales data from properties in your neighborhood that share common traits (like size, condition, and amenities) with your home. Your agent will examine these homes, also called “comps,” and study what they sold for or are listed for (depending on whether they’re still active on the market) in order to set the most effective price on your property.
Of course, half of any home’s value comes from its location. This means that a large portion of your home’s price is guaranteed to be the same as similar local properties just by virtue of where it’s at. But this isn’t the only factor at play. A home’s price-per-square-foot will also influence what it’s sold for.
Imagine that a 1,000-square-foot home, a 2,000-square-foot home, and a 3,000-square-foot home were all side by side on the same block. If the 2,000-square-foot home sold for $200,000, you could conclude that the price-per-square-foot was $100. You might also conclude that the 1,000-square-foot home would sell for $100,000 and the 3,000-square-foot home would sell for $300,000, but this isn’t the case.
Instead, a home’s list price is usually determined by taking the average price of the area along with half the price-per-square-footage. This means the 1,000-square-foot home from our example would likely have a value of about $150,000. Following that same logic, the 3,000-square-foot home would probably be valued at about $250,000.
As we mentioned earlier, though, factors like a home’s condition and amenities will also influence its price. A good agent will know how to take all of these points into consideration and choose a price accordingly. Our team has plenty of knowledge and experience on this front and would be happy to discuss our plan for helping you meet (and exceed) your real estate goals.
If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.
