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Comparative Market Analysis - Determing the Value of Your Home

Comparative Market Analysis -
Determining the Value of Your Home

A Comparative Market Analysis, or CMA, is essential to determining the value of your existing home or residential property. Key elements in determining home value are Location and Characteristics of the property.  This means that the basis for determining CMA is to compare your home to other homes in your area.

CMA takes into account the amount received from recent sales of comparable properties, and both the quantity and quality of comparable properties currently on the market. Finding a price that will attract willing, qualified buyers, in a reasonable time, is our desired goal. 

After we determine the value of your home, you can then decide on an Offering Price that will achieve your goals.  The price should not generally exceed the value by more than 5%, or you will be turning away qualified buyers who may have made offers for your home. 

Your asking price should be very near to the value of your home.

When considering pricing your home, here are a few key points to keep in mind:

  • Realistic pricing will achieve maximum price in a reasonable amount of time

  • Your cost, or what profits you would like, are irrelevant because the Market Value determines the price of your home

  • The cost of home improvements are almost always more than the added value

  • Houses that remain on the market for a long time do not get shown

  • Pricing your home correctly, from the beginning, achieves the highest proceeds

The Importance of Intelligent Pricing

Percentage of Home Buyers compared to Percent of Market Value Pricing for Your Home

One of the most challenging, but most important, parts of selling a home is determining the best asking price.

If your home is listed at a price above market value, you will lose prospective buyers who would otherwise be great candidates for purchasing your home. 

Importance of Pricing at Market Level

If you list at below market value, potential buyers may ask, "What is wrong with this home?  Why is the asking price so low?" and you won't be getting the optimum return on your investment.  

The figure on the right illustrates that most buyers purchase properties at market value, or slightly below market value.  As the price falls, below market value, the percentage of buyers purchasing homes increases. 

Therefore, you will be exposing your home to a greater number of potential buyers if you price your home at market value. 

Timing to Grab Buyer's Attention

Timing is also something to consider when pricing your home.  When your home is first listed on the market, this is when it will attract the most interest from potential buyers and the real estate community.  Starting off this critical period with the wrong pricing, above or below market value, can cause you to miss out during this peak interest period, and may result in your property remaining on the market longer.

The Effects of Over Pricing Your Home and how that mistake can increase selling time

The highest chance for a profitable sell of your home is when it's newly on the market, and priced at market value.

A realtor can give you the latest, most up-to-date information concerning market place activity, in your area, or surrounding areas, and help you determine the best price for your home.

Realtors also provide you information about financing, terms of the sale and contracts, and condition of competing properties.   These key factors are vital to obtain your goals of quickly selling your home at the best price.

Please contact me if you would like a CMA for your existing home or property, or if you have any questions about the Home Buying or Home Selling experience.

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Real Estate agent for The Woodlands, Lake Conroe, Kingwood, Spring, Tomball and greater Houston areas.

 

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