Have you as a home buyer or seller ever been offered a "CMA"? Sometimes, we REALTORS forget that folks out there in everyday land, not in Real Estate Land, don't understand our "lingo". We use terms and abbreviations like REO, FHA, CMA, FSBO (fizz-bo), GFE, and VA that mean absolutely nothing to most buyers and sellers. So, today, I'm going to try and clear up one of the most commonly used abbreviations:
The CMA.
CMA stands for "Competitive Market Analysis" or "Comparative Market Analysis". This document gives the interested party the likely value that a buyer may place on the property in question. Included in a CMA are properties that are similar to the subject property (the property that is being bought or sold). The goal when composing a CMA is to find properties that are most similar to the subject property in terms of location, square footage, lot size, upgrades, year built, amenities, and other features along the same line. The key is to look for comparable properties that have been on the market or sold in the previous 6 months or so. By looking at what these similar homes may have been listed for, sold, or not sold, for we can help determine the market value of any property in consideration. The information about the similar properties should come from a local Multiple Listing Service where properties for sale are stored along with specific information. This helps ensure that the information is relatively accurate and monitored by a local, non-biased office. Once specific properties are located, then they are compared to the subject property and adjustments are made for differences in each of the areas being compared. For instance, if the home you are selling has 2500 square feet, and the one you are using as a comparable only has 2000 square feet then a minor adjustment may need to be made for the difference. After adjustments are made and each property is compared, an estimated market value or suggested list price is determined based on the information collected.
The CMA is an important tool if you are trying to sell your home, because it provides insight into what a typical buyer might be willing to pay. This is what helps you determine where you want/need to set your asking price.
When buying a home, the CMA can help you determine how to structure your offer to the seller, and what may or may not be reasonable.
So, I hope that helps clear up some questions you may have about the ever-confusing Real Estate Language. Hang in there and Ask Questions! Your real estate professional is there to help you through each step of the home buying or selling process. Don't be shy!
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