Buying a home is a major accomplishment that should be celebrated. Whether it is a first home or a second, the thrill of closing on a home never gets old. However, many fall into the trap of overpricing their home. Homeowners come into the process pricing their home on what they believe it’s worth instead of looking at market indicators. If a home sits on the market for over three weeks, the homes appeal with buyers and demand will lower.
What is Market Value?
Market value is the amount a home will sell for in a competitive market place. Many factors will affect the price of a home. A higher volume of home inventory with little demand will affect the market price for homes in that area. Conversely, a limited amount of homes for sale with many buyers will increase the home’s value. The location of a home can also increase demand and affect market value. Some buyers will value the amenities in a community more than the actual characteristics of a home. Amenities like parks, schools, freeway access, closeness to work, and shopping can supply more value to the home buyer.
Some homes are not as desirable to the average buyer, and value for these homes are lower, so they sell at a discount. The value could be affected because it is near trains, power lines, or a cemetery. A home can also sell for less for expensive repairs and features that might be less valued.
Why Get a Comparative Market Analysis (CMA)?
A Comparable Market Analysis (CMA) will supply an estimate on the market value of a home in the current market. The goal of the CMA is to make an apples-to-apples comparison on homes that have similar features of the home you’re selling. For example, if you are selling a home with 3-bedrooms and 2-bathrooms with 2800 square feet, you want to use comparable properties with these same characteristics. You also want to make sure that these properties are in a range no farther than a 1/4-mile distance from your property. The closer the comparable is to your property, the better the estimate. Recent home sales 6-months or fewer are more reliable comps to capture the current market conditions.
The home should ideally have the same number of bedrooms, bathrooms, square footage, lot size, condition, and age. However, not all properties will be the same. Therefore, you want to find comparables that have the most characteristics and adjust the home price based on the comparables gathered. When the analysis is complete, you will have a better understanding of your home value. As a result, this will allow you to price your home correctly and put you on track of achieving your home selling objectives.