Whether buying, selling or refinancing, you want to determine a fair price for you home.
How do you know when fair is fair?
Having worked with many buyers and sellers in the Wilmington, Leland, Hampstead, and Castle Hayne area. This is a subject that is always brought up, and rightfully so. I truly believe that it is imperative for a seller and buyer to always have a complete picture of their local market. A Comparative Market Analysis also know as CMA is an important tool that can help you determine the estimated value of your property by comparing “apples to apples.” Since market value is determined by what a willing-and-able buyer will pay, a CMA can establish market value by comparing it to similar properties.
If you are a seller, A CMA Can help you Determine:
*Recent selling prices for homes similar to yours.
• The length of time these homes were on the market before they sold, and the length of time it will likely take for your home to sell.
• The homes you would be “competing with” should you decide to put your home on the market right away.
If you are a buyer, A CMA can help you decide:
• What to offer on a listing you want to buy
If you are refinancing:
• A CMA will give you some indication of what to expect when you have your home formally appraised.
What to look for in a CMA:
To get a complete picture of you local real estate market, have a real estate professional bring you up to speed with a CMA. The data in the CMA report should include:
* Currently available property. This means your “competition”. Remember that how you price your home relative to the competition is critical to your success. It’s good idea to visit open houses in your area to see how your home compares aesthetically.
* Pending Sales. These sales represent the most recent sales activity and will serve as “benchmarks” for the price of your home. When analyzing this data, your real estate agent will likely disregard rumors about homes selling for inflated sales prices. The actual sales price, which might not be made public until after the sale closes, could be quite lower than anticipated.
* Sales that occurred within the last 6 months.Your real estate agent will analyze these sales to determine current marketing conditions, but if the market is changing rapidly, he or she might shorten the time frame to three or four months. For each listing in your CMA, your real estate agent might find out how long it took to find a buyer for the home and if the listings took months to sell, or if the seller had to lower their price to attract a buyer. This category should include only listings that have “closed,” that is, when the title of the property has changed hands from sellers and buyers.
* Expired listings. These are listings that did not sell during the listings period and usually indicate the market’s “high water” mark. If a home doesn’t sell during a listing period, it’s likely that it was priced too high for the market.
Conducting a CMA on your own is often complicated and time-consuming. Why not save yourself the trouble and ask a local real estate agent to conduct the analysis? I have easy access to local listings and sales data in Wilmington, Leland, Hampstead, Castle Hayne, and surrounding areas. Your agent familiarity with the local market can affect the accuracy of a CMA, Particularly in a neighborhood with a lot of market variability.
To contact Nilesh Jethwa click here.
Posted by Nilesh Jethwa, Wilmington, NC
Adapted from the Buffini and Company