Real Estate Terms - What is a CMA?

Are you looking to buy or sell a home? If so, then you surely realize that the absolute wrong way to go about such a purchase would involve rushing in and making a buy without weighing your options and carefully deliberating on the venture. Rushing in to purchase a home is never a good idea because it could lead to making a poor purchase that undermines the entire reason you want to own a home: safety, security, and an equitable return on your original investment. This is where a Comparable Market Analysis (CMA) becomes such a great help. It is the perfect way one can increase the odds that the buying and/or selling decision is arrived at in the proper manner.

As the name would lead one to believe, a comparative market analysis centers on a detailed step by step guide to the many differences between the home you own or the home you wish to purchase to those other properties in the area that are similar. The actual reports can vary depending upon who is providing them and how detailed of a request you wish. Some reports can be as small as a one page printout while other reports could be upwards of a mini eBook. The key component of any CMA report will be the actual comparison itself which is sure to provide the detailed information one needs in order to make a clear and definitive understanding of the value of a particular property.

How can a CMA report be devised? First, a look at the active market listings in the region will be undertaken. Then, homes that are similar in size and condition will be examined. Afterwards, the prices of the various homes will be looked at as well. This will be used to arrive at the determining values of cost. For example, if you compare a home you wish to buy that is priced at $200,000 to a completely identical home that is selling for $250,000 then you are getting a great deal.

However, if the reason that the price of your home is lower due to deficiencies, you will be made aware of this as well. Case in point, two identical homes will have very different sale prices if one home has a thoroughly modern basement and the other home’s basement has long since fallen into neglect. This does not mean that the “neglected” home needs to stay neglected. Improving the dilapidated basement can turn around and raise the properties equity in a rather expedited manner. Depending upon how much the equity is raised and the cost of the renovations, the repairs could end up being paid for. Obviously, that would be a solid deal.

It would be wise to use a Comparable Market Analysis report prior to buying or selling any real estate. This will ensure you get the most out of the deal and prevent any weak purchase agreements from arising.

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