Experience and Market Area Knowledge
If you're new to the real estate business, or new to the area, get help. A CMA isn't just comparative math. A thorough knowledge of the dynamics of property sales in the specific area is required to make judgments based on the data presented.
Carefully Collected Comparable Properties
When selecting properties that you consider comparable to your subject property, important considerations include
- Statistically, sales far above or far below the bulk of the group are suspect. There likely are valid reasons for the divergence.
- Make sure you can justify comps not used. If you decide a comparable is not appropriate, have a good reason.
- Pull comparable properties from the subject property's area or as close as possible.
- Use sold comparables that are not too old. Stay in as current a time frame as possible.
- When quantity permits, use similar construction types only.
Adjusting Value for Property Differences
When comparing similar properties, there are always differences. Be sure to adjust your subject property's value estimate for its differences from the comparable properties:
- Add or subtract value for difference in lot or acreage size.
- Do the same for feature differences, such as bedrooms, baths, garage, etc.
- Look at financing differences that could have influenced sale price. Seller financing can at times result in a higher price paid for a property that is not related to its true value.
A Current Analysis of the Competitive Market
A full and detailed report to your listing prospect/client can not be complete without a similar market analysis of the properties listed and competing with their home at the time. Your list price recommendation can be modified up or down depending on how many homes are listed in the area at the time and their list prices.
Knowing that some of the highest sold comps came from periods with very low inventory could cause you to amend your list price estimate downward a bit if the current market has a significantly higher inventory.
Results that are Displayed in an Easy to Understand Format
This is not a promotion for "pretty". There are software solutions for almost any MLS system that produce very polished looking reports for comparative market analysis. The value is in the data and your interpretation of it. Don't let the value of the "presentation" take on a higher importance than the selection and interpretation of the data.