When I first talk to perspective sellers I let them know that I will need to do a CMA on their home before I can tell them an appropriate list price for their home. The first questions I get back is always, “What is a CMA?”
A CMA is a Comparative Market Analysis. In order to determine what your home is “worth” to prospective buyers, an agent needs to see what your neighborhood market is commanding. As a seller you should be aware of what goes into a CMA (Comparative Market Analysis) so you can be better prepared for the results.
1. The style of your home – Each area has a favorite style of home. Most buyers in Westchester County that I’ve worked with are interested in a colonial style home. If your home is a colonial in Westchester it could command a higher price because there is more demand for that style of home. If the style of home in your area is mostly ranch style and your home is a ranch style home then buyers are more likely to be aware of the fact and your home’s value may not be as affected as it would be if it were in a neighborhood with mostly colonial style homes. Know that if your home is a unique or less desirable style that your asking price will have to reflect the lack of demand.
2. Condition – I know everyone believes that their home is in tip top condition, but unfortunately that isn’t always true. You may love your 1950′s kitchen because of the memories it holds for you, however be aware that it can affect the asking price of your home. You are either going to have to find that niche buyer who wants a 50′s style kitchen or a buyer who is willing to do the work to update the kitchen. Also if your roof has not been done in 20 years expect a lower value of your home because buyers are going to want a lower price since they know they will have a large cost coming. Buyers are savvy and will not pay top dollar for a home that needs repairs or updates because they know they will not recoup the cost of updates and repairs.
3. Location – Westchester County is a great microcosm to see that location plays a large role in home prices. Generally home prices in Westchester are higher than the nationals average due to our close proximity to New York City. In addition home prices rise in areas with high school system ratings. Schools are usually a high priority for buyers making this a significant factor in pricing your home.
4. Number of bedrooms – Every home comes with a CO or Certificate of Occupancy. On the CO the town/city/village indicates how many bedrooms your home has. Even though you may be using 4 rooms as bedrooms, if your CO only reads 3 bedrooms it can only be marketed as a 3 bedroom and can lower the value of your home.
5. What has sold or about to sell – Real estate agents have the ability to see what is in contract in your area and what has sold. From there were can find out what list price was of the homes in contract or sold and what the final sale price was. This will be an indicator of what buyers are willing to pay for a home in your area.
Now that you know what factors go into a CMA, the question is why do you need one? The answer is simple, you need to know what the market is going to command. You may have paid $800,000 for a house in 2004 and want to sell for $900,000, but the market has changed since then and you need to know that buyers in your neighborhood are only willing to pay $700,000 for your home. Knowing this from the onset will not only manage your expectations but will also allow you to make better financial decisions for your family. If there is not a way you can pay off the remainder of your original mortgage with a sale price of $700,000 then it may be better not to sell your home if possible. If you are moving and have to sell for a loss you will be better able to plan for how you will fund your future home.
A CMA from a licensed real estate associate broker is always going to be more accurate than the estimates you find online, because brokers are better able to look at the details of your home than an algorithm will be. I always suggest looking at a few CMA’s from a few brokers. You not only will confirmation of the price range your home can be listed for, but you can also spot that agent who has less knowledge about the market.