Importance of a Comparative Market Analysis When Selling Your Home

The importance of a comparative market analysis when selling your home

See this beautiful home at ComFree.com

This week, Scott Bollinger, Licensed Broker at Commonsense Network brokerage, part of the ComFree family in Alberta, is providing some important tips for selling your home.  You can hear his Real Estate Minutes on the radio!

Setting the right price for your home can be a challenge. “But it’s a lot easier when you have the right support,” says Scott Bollinger.  “Our licensed professionals can help you with what’s called a Comparative Market Analysis (CMA).  It’s a report that gives you what you need to set the right price”

“If the listing price is too high, then the seller may need to wait longer and in some cases may need to withdraw the listing until market conditions improve,” adds Martin Rygiel, real estate professional and Director at Commonsense Network brokerage in Ontario. “If the price is too low, then the seller will not get the best value for the property even if they are able to make a quick sale. That’s why a CMA is very helpful.”

A CMA is a report, varying in detail and length, which compares home sales and other relevant information within a targeted market area. With a Comparative Market Analysis, home sellers get reassurance and confidence from knowing the fair market value for their home.

Standard comparative market analysis criteria and data used for generating reports include:

Active property listings

These are active home listings in the related area. Note that sellers can list any price for a home, so the listings do not necessarily represent current market value. The price that a home sells for is a better indication of the current market value. Often the sold price is considerably less than the original listing price.

Pending home sales

These are listings for properties that are pending sale and are not currently on the market. The pending sale listings are useful for comparing prices in the final negotiation stage. Again, the final transaction price may differ from the pending price. The pending home sales listings are most useful in gauging the future direction of the local real estate market. A good rule of thumb is not to list a property at rates higher than current pending sales prices for a similar property since that could delay a successful sale.

Sold home listings

Compare homes closed within the last six months to get a good handle on current market values. Older sales are less useful as the market is constantly changing. Appraisers use these listings together with pending sale prices to value a home for a buyer. In the same way, home sellers should study both listings to help in setting a price.

Seller’s remorse

Another type of listing consists of properties taken off the market. For example, a seller may suddenly decide they no longer want to sell their home.

Overpriced and withdrawn

If sellers cannot find a buyer at a certain price range over time, they may decide to withdraw from the market to wait for prices to rise to an acceptable level.

Compare similar properties

When looking to price a property, always look for homes in the same category. They should match closely in terms of age, style, shape, size and condition.

Age of construction

The age of the home is an important factor when it comes to pricing. Generally, it is a good idea to compare properties that were constructed within a few years of each other. In many cases, homes right next to each other may differ significantly in age. They may have been originally part of different subdivisions added gradually over time without any seams between them.

General condition of home

The amenities, renovations and general condition of the home are also important considerations when comparing properties. For example, a home that needs a new roof and other essential repairs cannot compare to a newly-renovated house. Additions like swimming pools, Jacuzzis and decks can also add to the value of a home.

Location

One of the most important guides in home price is location. Home sellers should not compare a home in a prime location to one in an undesirable one even if the properties are otherwise very similar. Buyers will pay for locations that provide scenic views and peaceful settings, and that offer access to shopping or nightlife areas. On the other hand, they are less likely to desire homes located near power lines, railways or highways. A home near an industrial complex will also generally have a lower value than a similar home located in a desirable area.

Author Bio:

Brent Taylor was a contributing writer at MortgageLoan before becoming one of the editors of the site. He spends most of his time writing blog posts and editorials for finance websites.

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Rosy Saadeh

About Rosy Saadeh

Rosy Saadeh is a Social Media Manager and Marketer and spends her time scouring the net trying to make new friends, help clients and post interesting stories about real estate and the like in Canada. Connect with her on Twitter, Facebook, Google+, and Pinterest.

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  1. Pingback: The Key to Selling Your Home Quickly | Ontario Mortgage Broker, Best Mortgage Rates Ontario, Ontario Mortgage Rates, Toronto Mortgage Broker

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