Acting as a seller’s real estate agent can be a rewarding experience – both professionally and financially. One thing you absolutely must know inside and out is the CMA. The Comparative Market Analysis is so essential that you should make it a habit to create one whenever you are preparing to sell any house. Here’s a closer look at what a CMA is, its purpose, design, and how to present it to your client when they have real estate for sale.
What Is a CMA?
A CMA is an estimate of the price a home will sell for when the transaction closes. It considers similar properties to determine what price range the seller should choose for the highest probability of the outcome they want. And as someone with a real estate license, you are one of the few groups of people qualified to create a CMA.
A CMA is an objective tool that real estate agents create using data, descriptions, and market knowledge. This is not just your opinion out of thin air. You arrive at it through research and analysis.
Why Sellers and Sellers Agents Need a CMA
Both sellers and seller’s agents need a CMA. Sellers need them to understand what their home is worth to make the most realistic decisions about accepting or turning down offers. After all, they are likely to hear rumors and opinions about the value of their home. However, with a CMA, you can show them what their home is really worth and why you say that. With it, you can prevent them from asking too little or demanding a price no one will pay.
A Real estate agent also benefits from the CMA. It’s not only a tool to help them do their job. It offers the seller’s agent a way to help their client get the price right. The client goes away happy, and the agent receives their commission.
As a seller’s real estate agent, you need to know all the terms used in and about the CMA. You can learn more about these terms and how they are used in online real estate courses like Roadmap to Success: Sellers. Here are a few of those terms.
– Subject – the real estate for sale that you are analyzing
– Comparable (or “comp”) – a similar property that has sold
– Competition – a currently listed property that might compete with the subject
– Adjustment – amounts added or subtracted from comp’s sale price
– Neighborhood – a geographical location with social connections
– Cost – total amount historically paid for the house
– Price – the amount paid for a comparable that was sold or its listed price if on the market
– Market value – also called fair market value – is the price a property would likely sell for in a competitive market
Creating a CMA
Real estate agents make many CMAs during their careers. The documents may have different lengths, styles, and appearances. Of course, a CMA or any document you present when working with real estate sellers should be neat, clearly written, and professional. However, whether you make it two or ten pages, the most important thing is that you include the information your client needs to settle on an asking price.
Real estate agents must research using excellent sources before putting together their Comparative Market Analysis. Use the following sources to compile and analyze the data on the seller’s real estate for sale and the comparables.
– MLS Matrix CMA feature
– RPR Report
– Public property records
Items to Include in the CMA
Whether your CMA is short or long, you will need to put in any information the seller needs to make good decisions. Some of the items real estate agents usually include in a CMA include:
– Description of the market
– Analysis of comparables
– Explanation of adjustments
– Commentary from the seller’s agent explaining how they arrived at their assessments
– Recommended price range (not a specific number) based on the analysis of the properties
After you create the CMA, make an extra copy of it to bring to the meeting with your client.
Presenting the CMA
When it is time for you to present the CMA to your client, your job as the seller’s agent is to instill confidence and a realistic understanding of their home’s value.
Along with showing and explaining the CMA, you will need to handle the seller’s objections as they arise. Together, you and the seller can come to decide on a reasonable price for their home, will sell their home in a fair amount of time, and will be advantageous to the seller. The CMA will have served its purpose well when you can do that. With every CMA you prepare and present, you will hone your realtor skills more.