What is a CMA?
What is a CMA?
The acronym CMA stands for Comparative Market Analysis, which is a report regarding the estimated market value of real property based upon generally available data. It is important to note that a CMA is not an appraisal by a licensed appraiser.
From a seller’s standpoint, the number one question they want addressed is ‘what might my home sell for in this market?’ In other words, they often want to do the ‘math’ so as to get an idea of the number they will walk away with.
My approach when listing a property is to evaluate the property from both a seller’s point of view as well as from the point of view of a potential buyer.
Correct pricing is critical. When selling your property, it is important for sellers to generate a high volume of ‘traffic’ to the property to maximize its exposure and marketing potential. Improper pricing risks either discouraging otherwise qualified buyers (if priced too high) or not getting the full value for the property (if priced too low).
From a buyer’s perspective, consumers need good information regarding value to avoid ‘overpaying’ for a property.
Let’s take a look at what the components of a CMA are:
Selecting at least three ‘like’ properties that have recently sold, (preferably sold within the last 90 days) and the cur- rent competition of three ‘like’ properties that are currently listed and available for purchase. Like properties are similar in interior living square footage, age of the home, condition of the property, lot size, and then, matching as closely as possible, any upgrades and improvements to the home.
The most common method of calculation is a ‘Cost Comparative Approach’ in which the subject property is placed on a grid of information with the property specifics, and then the selected properties are also placed on the grid, and those values are either superior or inferior to the subject property and are subtracted out or added in.
It is the opinion of an independent licensed appraiser to determine these values and to then tabulate a marketable price for the lender’s perspective or all cash buyer.
One common question that I get asked frequently is ‘what about the assessed valued?’ This is a value assessed by the City and County of Honolulu for real estate property tax purposes and it may not be consistent with actual fair market value.
In light of the sheer volume of information currently avail- able, it is easy for consumers to become confused. A CMA conducted by a full time profession- al Realtor can provide you with the information you need to make the right decisions in your real estate matters.