CMA Analysis
Comparative Marketing Analysis
Creating a great Comparative Market Analysis (CMA) involves a thorough evaluation of market conditions, property details, and comparable sales. Here are 5 steps to create an effective CMA:
1. Gather Property Details
- Step 1: Collect key information about the property such as address, square footage, number of bedrooms and bathrooms, lot size, age of the property, and any special features.
- Step 2: Obtain recent sales history, ownership records, and condition (updates, renovations) of the property.
2. Analyze Comparable Properties
- Step 3: Search for at least 3-5 comparable properties (comps) that are recently sold, currently active listings, or pending sales within the same neighborhood or similar area.
- Step 4: Ensure that comps are similar in terms of size, condition, location, and amenities. Adjust for variances such as square footage, upgrades, and market conditions.
3. Evaluate Market Trends
- Step 5: Research current market trends in the area, including recent sales data, average days on market, and pricing fluctuations. Use tools like MLS data, local real estate statistics, and market reports.
4. Calculate Adjustments
- Step 6: Make necessary adjustments for differences between the subject property and comparable properties (e.g., adding or subtracting for square footage, upgrades, or views). This will help determine a more accurate valuation.
5. Create the CMA Report
- Step 7: Compile all information into a professional CMA report. Include property details, comparable properties, market trends, and a pricing recommendation. Visual elements like graphs, charts, and photos can enhance the report for easy understanding.
- Step 8: Present the CMA to the client, explaining the findings and how the analysis supports the recommended pricing strategy.
Factors Affecting Home Value:
Location
- Proximity to schools, parks, public transportation, and amenities.
- Neighborhood demand and desirability.
- Crime rate and safety.
Size and Layout
- Square footage, lot size, number of bedrooms, and bathrooms.
- Layout functionality, room sizes, and flow.
Condition and Upgrades
- Age of the property and major systems (roof, HVAC, plumbing, electrical).
- Renovations, updates, or additions (kitchen, bathroom, basement, outdoor spaces).
- Curb appeal and exterior condition.
Market Conditions
- Current supply and demand balance.
- Recent sales activity and days on market.
- Market trends for pricing (up or down in a given area).
Amenities and Features
- Garage, pool, fireplace, landscaping, and smart home features.
- Energy efficiency and sustainability upgrades.
Steps to Create the CMA Report:
- Research Market Data: Use free tools like Realtor.com, Zillow, or your local MLS for recent sales and active listings.
- Compile Property Information: Gather details on the subject property and comparable homes (size, age, features, etc.).
- Analyze Adjustments: Consider differences in condition, upgrades, and size adjustments.
- Create Visuals: Utilize Canva or other free design tools to create easy-to-read charts and graphs.
- Generate Report: Combine data into a professional report showcasing valuation insights.
By using these tools and steps, you’ll provide a thorough, data-driven CMA that clients can trust.
Steps to Create a CMA Graph:
Data Preparation:
- Use a spreadsheet (e.g., Google Sheets or Excel) to compile property data like in the example here.
Graph Creation:
- Use Canva or Google Sheets for creating the graph.
- In Canva, go to “Create Design”, choose a chart template, input data, and customize visuals.
- In Google Sheets, create a bar chart or line graph by selecting data, then choosing “Insert > Chart”.
- Use Canva or Google Sheets for creating the graph.
Export:
- Save or export the chart as a PNG, JPEG, or PDF.
Free Tools to Use for Creating a CMA:
Realtor.com
- Offers free CMA tools with recent sales data, local market insights, and property comparisons.
Zillow
- Provides a free tool to compare home values, with basic data on neighborhood and market trends.
MLS System
- If you have access to a local MLS, it provides comprehensive and accurate comparable property data for free.
Canva (for creating visual reports)
- Free graphic design tool to create polished reports, graphs, and charts that enhance your CMA presentation.
Free CMA Template Example:
| Property Details | Subject Property | Comparable 1 | Comparable 2 | Comparable 3 |
|---|---|---|---|---|
| Address | 123 Main St | 456 Elm St | 789 Maple Ave | 101 Pine Dr |
| Size (Sq. Ft.) | 2,500 | 2,400 | 2,450 | 2,300 |
| Beds/Baths | 4/3 | 4/3 | 4/3 | 3/2 |
| Lot Size | 10,000 sq. ft. | 9,800 sq. ft. | 10,200 sq. ft. | 9,500 sq. ft. |
| Year Built | 1995 | 1990 | 2000 | 1998 |
| Condition | Renovated | Good condition | Recently updated | Fair condition |
| Price | $350,000 | $340,000 | $355,000 | $325,000 |
| Days on Market | 30 | 25 | 28 | 35 |
Example CMA: Properties with Unique Improvements
| Property Details | Subject Property | Comparable 1 | Comparable 2 | Comparable 3 |
|---|---|---|---|---|
| Price | $400,000 | $390,000 | $405,000 | $380,000 |
| Size (Sq. Ft.) | 2,500 | 2,400 | 2,600 | 2,500 |
| Beds/Baths | 4/3 | 4/2 | 4/3 | 4/2 |
| Lot Size | 10,000 sq. ft. | 9,800 sq. ft. | 10,200 sq. ft. | 9,500 sq. ft. |
| Year Built | 1995 | 1990 | 2005 | 1998 |
| Pool | Yes | Yes | No | No |
| Renovated Bathrooms | Partial Renovation | Full Renovation | Basic Upgrades | No |
| Renovated Kitchen | Partial Upgrades | Full Kitchen Remodel | Basic Finishes | Over-Improved |
| Condition | Good | Excellent | Good | Over-improved |
Comparative Adjustments:
- Subject Property has a pool and partially renovated bathrooms and kitchen, which contribute positively to value but may require a market adjustment.
- Comparable 1 has a pool and fully renovated bathrooms, boosting its market value.
- Comparable 2 lacks a pool but features a fully renovated kitchen, enhancing its appeal.
- Comparable 3 has minimal upgrades and has been over-improved, making adjustments necessary for accurate comparison.
Home Improvement Recommendations
Sometimes you should recommend to your client to make renovations or improvements prior to listing. What improvements they should make should often be reviewed relative to the CMA’s and what other properties sold for taking into account its finishes, improvements, curb appeal, landscaping, kitchen, bathrooms, backyard, pool, etc. over the subject property.
Example Table for Improvements and Renovations:
Here’s a table that illustrates how different improvements and renovations can affect a property’s value.
| Improvement | Description | Cost | Impact on Value | Return on Investment (ROI) |
|---|---|---|---|---|
| Kitchen Remodel | New cabinets, countertops, flooring | $25,000 | Increases value | 70-80% |
| Bathroom Upgrade | Modern fixtures, tiling, plumbing | $15,000 | Increases value | 65-75% |
| Basement Finishing | Adds living space, flooring | $20,000 | Increases value | 60-70% |
| Landscaping | Lawn care, new landscaping features | $10,000 | Enhances curb appeal | 50-60% |
| Energy Efficiency Upgrades | New windows, insulation | $12,000 | Reduces utility costs | 70-90% |
| Roof Replacement | New roofing materials | $15,000 | Adds structural integrity | 60-70% |
Explanation:
- Cost: The amount spent on the improvement or renovation.
- Impact on Value: The estimated increase in the property’s market value.
- ROI: Return on Investment, reflecting how much of the cost is recouped when the home is sold.