Comparable Market Analysis – What to Look For
It is not new news that both buyers and sellers need to pay close attention to the Comparable Market Analysis report.
As a buyer, your agent should provide this report to aid the discussion on offer price and terms. As the seller, your agent should provide this report to you to help determine listing price. Again, nothing earth shattering here… most property owners know the role of CMA reports in setting, or getting, the right price.
However, there is sometimes too much reliance on the Asking Price (a.k.a. List Price) on the CMA report. The asking price is just that—what the seller hopes to get for the property. The Asking Price may be the start of the negotiations, with both the buyer and seller expecting to counter-offer each other on price and terms, to arrive at an contract that both parties are satisfied with. Also note the difference between Original List Price (the first price at which the property was offered) and the List Price (the current asking price, after the Original List Price has been either increased or reduced).
With respect to determining a price, whether you are buying or selling, be sure to discuss with your Realtor the “in-progress” or completed transactions on the CMA report:
- Active Contingent. A contract has been accepted by the seller, but there are buyer contingencies, usually financing.
- Pending. Contingencies have been removed (buyer has performed) and the transaction is expected to close soon.
- Sold: The transaction has closed.
Your agent should put forward an analysis of the Pending and Sold categories, providng factual data that tells you what price buyers are willing to pay for similar properties.
Ask not what similar properties are listed for, but what they are selling for.