Comparative Market Analysis (For Buyers)
Researching The Comps: Comparative Market Analysis (for Buyers)
One of the most important tasks when purchasing a home is determining a fair price. This requires researching comparables, or "comps."
What is a CMA?
CMA stands for “Comparative Market Analysis.” It’s a detailed report that compares a home to similar homes in the same area to help ascertain a fair market value. Producing an effective CMA involves more than just running numbers through an automated program. The most important ingredient is local knowledge.
You must be familiar with your neighbourhood and knowledgeable about both the historical and current sale values of real estate there. Research properties in your neighbourhood that are comparable to the one you’re considering and have recently sold. It’s important to compare actual sold properties, not just list prices, as properties are only worth what people are willing to pay for them.
Key Factors in Comparables:
- Position: As close as possible
- Style: Similar architectural style
- Age & Condition: Comparable age and upkeep
- Internal Size: Number of rooms, bathrooms, etc.
- Land Size: Lot size and dimensions
- Gardens: Landscaping and yard features
- Parking: Availability of garages or parking spaces
- Date of Sale: The more recent, the better
No two properties are identical, so your buyer's agent will make adjustments for the differences between the sold properties and the one you’re looking at.
What Should a CMA Include?
The CMA you receive from your agent should, at a minimum, include:
- Addresses of the comparable properties
- Sold prices of each comparable property
- Sold Date of each comparable property
- Land size
- A photo and style of each property
- The total square meterage of each home
- The dollar amount per square meter
- Number of bedrooms, bathrooms, and garages
The final price calculated as fair value should also consider unique features, local inventory, interest rates, and how competitive the market is at the time.
Importance of "Sold" Over "Listed" Properties
Give much more weight to sold properties over listed properties. Listing prices only indicate what the seller hopes to get, which may not reflect true market value.
If the home you are considering is unique and significantly different from others, you may benefit from having an independent professional valuer provide a valuation.
Welcome Home
At JKL, we’re here to support you in making informed and confident decisions. Our experienced team will help you navigate the complexities of comparative market analysis to ensure you get the best value for your new home.
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