Wondering How to Price or Purchase a Home? A CMA Might Hold the Answer
If you’re entering the real estate world, you’ll hear a lot about “Comparative Market Analysis” or “CMA.” But what exactly is a CMA, and why is it such a big deal? Whether you're thinking about selling your home or making an offer on your dream house, a CMA is like having a detailed roadmap to guide your decisions. Here’s what makes a CMA one of the most powerful tools in real estate and why you’ll want to know what’s in yours.
What Is a Comparative Market Analysis?
In simple terms, a Comparative Market Analysis is an in-depth look at how your property measures up to similar homes in your area. It’s like a scorecard that helps determine the fair market value of a property by comparing it to other recently sold homes that are similar in size, condition, location, and features. Real estate agents use CMAs to help sellers set a competitive price and to guide buyers on how much to offer.
Think of a CMA as your cheat sheet to understanding the real estate market around you. Knowing what comparable homes sold for helps ensure you’re not overpaying for a property—or undervaluing your own!
Why Do You Need a CMA?
Pricing Your Home Right the First Time
Setting the right price from the start can be the difference between a quick sale and a property that sits on the market for months. Overpricing could scare buyers away, while underpricing may mean you leave money on the table. A CMA gives sellers the data to confidently price their homes, attract buyers, and potentially even spark a bidding war.Smart Offers for Buyers
When you’ve found “the one,” you want to make sure your offer is competitive but fair. A CMA gives buyers insight into the market, helping them see whether a property is overpriced or priced just right. It gives buyers confidence, knowing they’re making a smart investment.Negotiation Power
Knowing the market value of a property arms both buyers and sellers with leverage during negotiations. If you’re selling, you can defend your price with solid data. If you’re buying, a CMA can be the backup you need to negotiate a fair deal.
What Goes Into a CMA?
Creating a CMA involves more than just looking at a few numbers. Here’s a sneak peek into what your real estate agent considers when building this report:
Location: Homes in the same neighborhood or close proximity are the best comparisons.
Property Size and Type: Similar square footage, lot size, and home style (such as single-family, condo, or townhome) are key factors.
Features and Upgrades: Does your home have a pool, updated kitchen, or extra garage space? These amenities affect the value.
Condition: Homes in pristine condition are valued higher, so recent renovations or upgrades will play a role.
The goal is to find properties that are as close as possible in these aspects to provide an accurate valuation.
Why a CMA Isn’t an Appraisal (But Is Just as Important)
A CMA is not the same as an appraisal, which is an official valuation performed by a licensed appraiser. While a CMA provides an estimate based on comparable properties, an appraisal is usually required by lenders to finalize a loan. Think of a CMA as the proactive way to understand value before the bank steps in with an official number. Having a CMA done first can help sellers and buyers have realistic expectations.
When Should You Get a CMA?
Before Listing Your Home: As a seller, you want to ensure you’re pricing your home to attract serious buyers.
When Making an Offer on a Property: Buyers can make an informed offer by understanding the local market.
If You’re Curious About Your Home’s Value: You don’t have to be buying or selling to get a CMA. It’s always helpful to know your home’s current market value, especially if you’re considering refinancing, renovating, or just curious about your investment’s worth.
Ready to Get Started with a CMA?
A CMA is a tool that takes the guesswork out of real estate. It empowers you with data, confidence, and a clear picture of your local market. So, if you're curious about the value of your home or planning to buy a property, a CMA could be your secret weapon to make smarter, more strategic moves in real estate.
Want to learn more? Reach out to schedule a CMA with an experienced agent who can break down the numbers and help you see the potential for your next real estate venture!
Call 239-785-6986 today for a free valuation!
National Association Of Realtors® Settlement On Broker Commission
The National Association of Realtors (NAR) has reached a proposed settlement agreement to resolve ongoing litigation regarding broker commissions. This agreement aims to end claims brought by home sellers and will have significant implications for the real estate industry.
Disclaimer: This blog is for informational purposes only and should not be taken as legal advice. Please consult a real estate attorney for any legal concerns or questions.
Overview of the Settlement
The settlement, which is still subject to court approval, would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned Multiple Listing Services (MLSs), and brokerages with a residential transaction volume of $2 billion or below in 2022. This agreement is seen as the best possible outcome given the circumstances, influenced by large settlements reached by other corporate defendants.
Coverage and Implications
For NAR Members:
Over one million NAR members are released from liability nationwide.
This release covers all members except agents affiliated with HomeServices of America and employees of the remaining corporate defendants still litigating.
For Brokerages Owned by Members:
Brokerage entities with a residential transaction volume of $2 billion or below in 2022 are released from liability nationwide.
The agreement provides a mechanism for larger brokerages (exceeding $2 billion in transaction volume) to obtain releases if they choose.
For NAR and REALTOR® Associations:
NAR, state/territorial, and local REALTOR® associations are released from liability nationwide.
Officers, directors, and participants in NAR activities are also released.
For Association-Owned MLSs:
All MLSs wholly owned by one or more REALTOR® associations are included in the release.
For Other MLSs:
Other MLSs can opt into the settlement by adopting the MLS practice changes and paying a per-subscriber fee to the Settlement Fund.
Practice Changes Effective August 17th, 2024
One of the significant changes involves the prohibition of offers of compensation on the MLS:
Compensation Options: While cooperative compensation remains an option, it must be pursued off-MLS through negotiation and consultation with real estate professionals. Buyer brokers can still be compensated through:
Fixed-fee commissions paid directly by consumers.
Concessions from the seller.
A portion of the listing broker’s compensation.
Compensation will continue to be negotiable between agents and their clients.
Consumer Choices: The settlement preserves consumers' choices regarding real estate services and compensation. Listing brokers and sellers can still offer compensation for buyer broker services, but these offers cannot be communicated via the MLS. Seller concessions, such as buyer closing costs, can still be communicated via the MLS, provided they are not conditioned on the use of a buyer broker.
New Rule on Written Agreements
Effective August 17th, 2024, MLS participants working with buyers must enter into written representation agreements before touring homes. This change ensures that consumers understand the services provided and their associated costs clearly.
Ongoing Litigation and Settlement Approval
The agreement does not end litigation for all defendants. Ongoing cases concerning the MLS cooperative compensation Model Rule may continue.
The settlement is subject to court approval, a process that may take several months and will include opportunities for interested parties to object.
NAR will seek to have litigation about the MLS cooperative compensation Model Rule paused pending settlement approval.
Next Steps for NAR
NAR will pay $418 million over approximately four years as part of the settlement. This substantial sum will require NAR to use its remaining resources effectively to continue delivering value to its members. NAR remains committed to leading the industry forward, supporting its members, and providing valuable resources and advocacy.
Conclusion
The NAR settlement brings significant changes to broker compensation practices in the real estate industry. As these new rules take effect on August 17th, 2024, real estate professionals and consumers need to stay informed and adapt to the evolving landscape. For specific legal advice, please consult a qualified real estate attorney.
Stay tuned for updates as the settlement process unfolds. If you have any questions or need further assistance, feel free to reach out. We're here to help you navigate these changes effectively.