Comparable Market Analysis

A comparable market analysis is conducted by real estate agents, buyers and sellers. They use the analysis to evaluate the worth of a property in comparison to similar properties. The real estate agent uses this evaluation to set a price for the property and list it at that price. The price of the property is decided upon by looking at the prices at which similar properties sold within the past year. This property is likely to be sold for a comparable price.


Report on Listings

A comparative market analysis is known as a CMA. It is a standardized report that contains all the necessary information for the sale of property. It contains information on listings for similar properties. The listings could be active, expired, pending or sold. Active listings contain information on all the properties that are ready to be sold immediately. Expired listings are properties that have not been able to fetch a price even though they are available for sale. Pending listings are properties that have not yet struck a deal and sold listings are the properties that have sold recently.
   
Comparable Properties

Real estate agents compare similar properties before coming up with a price for a particular property. Similar properties are those that are analogous in size and square footage. The number of rooms must be the same, and the size of the yard, parking space and pools (if any) should be comparable. A single-story home and a duplex should not be compared. Also, the age and condition of the properties should be comparable.

The properties should be in the same locality and any upgrades must also be alike. A similar property should have been sold in the past six months to one year.
   
Different from Property Appraisal

A comparable market analysis is not an appraisal on the property; the CMA is conducted before a professional appraisal is done. The CMA gives the buyer, seller and real estate agent a fair idea on what the property is likely to fetch on sale. It is usual practice to allow a 10 percent margin of error on the price determined.
   
Analyzing Trends

The comparable market analysis is also useful in analyzing trends of the market. The interested parties get an idea if the values of properties in a particular locality are likely to go up, remain constant or depreciate in value. On the basis of this, the parties are likely to make their decisions. If the seller finds that the properties are going to devalue with time, he acts fast and tries to sell his property as soon as possible. A buyer takes measures to buy a property quickly when she knows that the values are likely to appreciate in the near future.