What is a CMA?
The short answer is that a CMA is a Comparable Market Analysis.
The purpose of a CMA is to arrive at an understanding of market value for a specific property.
When a Seller asks me to list their home for sale, we review together my Comparable Market Analysis - my CMA. The key elements of a CMA are the relevant comparable sale events - the comps.
For example, let's say a Seller owns a 1,000-square-foot, renovated, two-bedroom, one bath condo without parking in Cambridge. The CMA I put together will review the relevant comps - that is, the relevant properties in Cambridge that are similar. In this example, I will be reviewing in the CMA the recent condo sale events in Cambridge for those condos with approximately 1,000 square feet, two bedrooms, one bath and no parking.
Of course, no two properties are the same. Among the key elements that influence an understanding of a property's value are condition and location. That being said, relevant recent sale events, pulled together in a CMA and reviewed there, typically allow one to zero in on a specific market range of value for a property.
A valuation analysis - a CMA - is equally valuable to a prospective Buyer. When a Buyer client of mine wishes to make an offer, I complete a CMA of the subject property. This allows the Buyer to understand if the property is priced below market value, at market value, or at a premium. This information is useful to a Buyer making an offer.
For sure, market value is ultimately determined by the market. That is, what a ready, willing and able Buyer will pay for a property offered by a ready, willing and able Seller, typically in the open market. Since the middle of 2012, many properties in Cambridge and Somerville have been selling for over the asking price. Winning bids way over the list price - and often over market value - are not ultimately informed by analysis. Rather, they are informed by someone's desire to acquire a specific property in a competitive bidding environment. That being said, a CMA is a crucial element for both Buyers and Sellers in the real estate process, as it sheds light on the range of value in terms of comparable sales.
A knowledgable real estate agent can be counted on to deliver a meaningful CMA. Make sure you are seeing one when you are buying or selling.
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