What Is A CMA?
CMA. That acronym gets thrown around like dice in a board game. It’s almost as if you should know what it means… automatically.
Well, kind of.
Any Real Estate professional knows what a Comparative Market Analysis (CMA) is. Like breathing or ordering your favorite coffee. You as the consumer probably won’t know what it is much less what it stands for until your REALTOR explains it.
But we’re skipping formalities here and getting right down to it! So, let’s get going.
A CMA, Comparative Market Analysis, is a report custom tailored to the property it is performed for. The “Subject Property”. Now generally there are a few set standards, as to what should be included. But when you really get down to it, it’s a fancy way for a Real Estate Professional to tell you what price they think you should list your home for, and usually, what you can expect to sell it for. With factual basis and comparable properties to back up their “Professional Opinion of Price”.
A CMA does not have required information, there’s no law or set of rules by any institution for what needs to be in a CMA. If there were, then that report would then be what’s called an Appraisal, which can only be performed by a Licensed Appraiser in New York State. However Real Estate Brokers usually have a standardization for their agents to use when writing reports.
Generally, a CMA includes properties that match the subject properties general qualities that are then divided into groups of recently sold, currently listed, and others that have been on the market but didn’t sell. Usually within the past 6 months. But if you are in a rural area or have a unique property up to 12 months is sometimes used.
Typically, the only properties that are used to determine actual listing price are the sold ones. Because they have proven market values. THEY S-O-L-D! Currently listed properties, are not necessarily worth what the seller is asking. They are however your competition, and properties that did not sell, don’t count for much. They are there mostly to give you an idea of the market’s past.
And just like the comparable properties, the CMA itself has an expiration date. The real estate market is a fluid thing, fluctuating based on the weather, economy and other factors. Rural areas tend to be more stable than cities. The fact remains though that a CMA is usually only accurate for 2-3 months. Sometimes less.
So, there you have it. The quick, condensed explanation of a “CMA”.
Until next time,
Jim Lenahan & Mindy Bradley – Welcome Home Team of HUNT Real Estate