Potential home sellers are sometimes uncertain about how much to ask for their property. If the price is too low, the seller could lose out on thousands of dollars. If the price is too high, the home could remain unsold. Home sellers can receive guidance on setting an appropriate sales price by receiving a comparative market analysis from a real estate professional.
A comparative market analysis (CMA) is not an appraisal. A CMA is an informal estimate of the current value of a home. A CMA is not as detailed as an appraisal, although a CMA takes into account some of the same factors as an appraisal. Many real estate firms offer prospective home sellers a CMA for free or at minimal cost.
The estimated value of your home is determined by comparing it with comparable homes that have sold recently in your area. Real estate prices tend to change over time, so price data from the last few months is much more relevant than older data. A real estate professional who has a working knowledge of your local area has a distinct advantage in estimating the current market value of your home.
Structural factors affecting home prices
Local government records can provide useful information about the sales price of real estate transactions. To prepare a CMA, the following factors are taken into consideration when comparing your home to recently sold properties:
- interior square footage
- number of rooms
- overall condition
Intangible factors affecting home values
Intangible factors sometimes come into play when a potential buyer is deciding whether or not to purchase a particular home. The school district within which a property is located is important for parents of school-age children. Minimal noise from street traffic is an important factor for some home buyers.
Effect of inflation and market demand
All of the factors that affect the value of a home must be considered within the overall context of the economy at large. In most areas, home prices generally tend to increase or decrease in unison. Because most home loans are subject to federal regulations, the agency that oversees much of the mortgage industry is a reliable source for general home price data.
The Federal Housing Finance Agency provides an online lookup tool that estimates how much home prices in an area have changed over a specified time period. The online estimate is only a broad measure of the average price appreciation of homes in an area.
The best time to obtain a comparative market analysis is right before you place your home on the market. Contact a real estate firm like Simmons Group for more information on real estate services.