A comparativemarket analysis (CMA)
CMA is an informal estimate of your home’s market value. The value is determined through comparison to similar property transactions located within a certain radius. A CMA will accurately establish a sale price. Your local real estate agent is familiar with the local market and can more accurately determine a market value than a Zestimate. Creating an accurate comparative market analysis is really a skill on the part of the real estate agent. You really need to know how each of the variables will impact the final projected sale price of a home. These things can also vary by location as well. So, what goes into determining a CMA? Some of the properties used to determine the market value are as follows:
- The real estate agent chooses comparable homes to yours that are recently sold properties, homes that have gone under contract but are not yet closed and homes that are currently for sale. Sold properties give the best indicators while homes for sale give the least significant values when determining market value.
- The properties compared need to be “comparable”. For instance, a ranch or split level home is not comparable to a colonial. Homes stylistically do not have to be identical but should be in the same family.
- There is some degree of subjectivity involved. Certain amenities have varying degrees of value. I.e., some people may pay more for a swimming pool while others may offer less if they plan to remove it.
- Some of the main features compared include:
- The number of bedrooms.
- The number of bathrooms.
- The square footage of the home.
- Is there a garage?
- The age of the home.
- The condition of the home.
- The amenities in the home – for example, does the home have central air?
- What are the kitchen and baths like?
- The location of the home; neighborhood, school district, local amenities
- How nice is the lot and what’s the size?
- How nice is the neighborhood?
A Zestimate is meant to give you a quick idea of what your home is worth but Zillow recommends you “then find a real estate agent in your area for a more personalized number.” A Zestimate if fine if you are just curious but when it comes time to sell, you need a CMA. Why? Most upgrade information is not in the public records and is not easily quantifiable. Zillow will not know about home updates and remodels unless they have been reported to the local tax assessor, so those items are not used in Zestimate calculations. While they do utilize user-submitted data that is measurable, (e.g., additional bedroom count, bath count, and square footage) there is no way for them to systematically gather and verify the type of remodel or build information where the value is based upon how the final product appeals to the buyer. Because of this, the algorithm can’t use that information.
Zestimate: home characteristics, such as square footage, location or the number of bathrooms, are given different weights according to their influence on home sale prices in each specific geography over a specific period of time, resulting in a set of valuation rules, or models that are applied to generate each home’s Zestimate. Specifically, some of the data we use in this algorithm include:
- Physical attributes: Location, lot size, square footage, number of bedrooms and bathrooms and many other details.
- Tax assessments: Property tax information, actual property taxes paid, exceptions to tax assessments and other information provided in the tax assessors’ records.
- Prior and current transactions: Actual sale prices over time of the home itself and comparable recent sales of nearby homes
As you can see from the Zestimate versus sale price of the recently sold properties below from the Scottsdale area, the numbers can have a wide range of error from what to truly expect. If you price your home too high, it will take longer to sell and frustrate you when you have to reduce the price lower than you planned. If you price the home too low, you lose money.
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Now that you know the value of a CMA, you must choose the right realtor to do the work. Platinum Realty Network has a highly experienced team of full-time real estate professionals focused on the areas of North Scottsdale, Cave Creek, Carefree and North Phoenix, Williams, and Flagstaff. With unprecedented access to the areas finest private country clubs and golf courses, our clients experience the most personalized, professional and stress-free real estate service in the area.
We would be happy to assist you with your Arizona Real Estate needs. Get your local Free Market Analysis here.