Comparative Marketing Analysis or CMA is the examination of prices of similar properties in the same area that is recently sold. CMA is an old standby tool of real estate business. Real estate agents usually use CMA to win listings.
Real estate is about property containing lands and buildings on it with other natural resources like crops, minerals, water or other immovable resources. The agent considered these aspects and assembled data with recent as well as pending sales to calculate the pricing of the house. It is the job of the real estate agents to do a comparative analysis for their clients to help them in determining a price to list when selling a property or a price to offer when buying a property.
Comparative marketing analysis is a report which can vary from a two-page list of similar home sales to a fifty pages comprehensive guide. The length and the complexity of the report made by the agent solely depend on the diligence of the agent and his business practices.
In general, a standard comparative marketing analysis consists of some of the following predetermined points:
- Active Listing – Active listings are the list of homes which are currently up for sale. These listings matter as much as only providing competition to the buyers. They do not indicate the market value as the sellers tend to have the liberty to ask whatever price they want to ask for their property.
- Pending Listings – Pending listings were once active listings which change eventually. These are the lists of the properties up for sale for a long time, i.e., the properties in the active lists have been pending for so long that they have been converted to pending sales homes.
- Sold listing – Homes which have been sold in the past three months serve as a comparable price to the seller. These are the sales that will be later used as an appraiser when appraising the seller’s home for a buyer along with the pending sales.
- Off-market, withdrawn, or cancelled listings – These lists contain the details of the properties which were lifted off the market for a variety of reasons. Generally, the properties are removed from the market arena because their prices tend to be too high and no one purchases it. The characteristic feature of this kind of lists is that the median prices of this group will always be higher in comparison to the other groups.
Some of the listings cancels are as follows –
- Seller’s remorse: The seller decides not to sell his property due to personal attachments to the property.
- High-priced properties: In this case, either no offer is made, or even if the offer is made, it is low-priced and the proposal gets rejected.
- When the DOM or the ‘Days On Market’ tend to be extended, buyers do not get easily enticed if they notice that a property has been too long in the market. That is why, many times, agents withdraw the listings so that they can put them back as a recent listing which in turn can attract more buyers.
- Repair requests: It happens that a probable buyer may like the property at the time of inspection but demands some repairs. Most of the time, sellers agree to this, but if they do not, buyers hesitate to purchase it.
- Expired listings – This group reflects the highest median sales price due to not selling and also because the property was unreasonably priced. Listings also expire for some other reasons like they were not marketed aggressively or because the property was in need of repairs. Sometime or the other, the expired listings may be shown as an active listing, put up a new agent and at a new price.
Examining comparable sales is a tough job. Comparable sales are the ones that most closely resemble the seller’s property. One cannot compare a two-storeyed building to a penthouse. Therefore, the properties which should be compared should be identical to the seller’s property regarding the shape, size, and condition.
The conditions which should be kept in mind while selecting the property for comparing are –
- Similar square footage
- Almost same age of construction
- Similar amenities and upgrades
- Location of the property
For many new agents, preparing a comparative marketing analysis report or a CMA report in his initial days would be downright tough. But with the advanced technologies and tools, preparing this report has become easier. Also, since a comparative marketing analysis is just an evaluation of comparable properties situated in the same locality, the buyers can perform their own CMA.