Real Estate Marketing Ideas, Farm Fridays

How to Prepare a Comparative Market Analysis

By Meaghan Loraas Last Updated February 16, 2022 7 min read

Welcome back to Farm Friday! As we all prepare for a busy spring season, it’s time to brush up on listing presentation skills. In this article, I’ll walk you through the process of preparing a comparative market analysis (CMA). I’m also throwing in a template I made designed to help you convert seller leads. Download the template for free below.

What is a Real Estate Comparative Market Analysis?

A CMA is an essential tool that real estate agents use when selling a home or property. It helps them determine how much their client’s house is worth and what other homes nearby have sold for recently. The information can be used to set realistic expectations about selling a property. A CMA will also give your sellers insight into whether there are any areas where their home could stand out from others in its neighborhood.

How do I start my own Comparative Market Analysis?

The first step is to find comparable properties near yours. This might seem like a simple task, but if you’re not careful, you may end up with too many listings. You want to ensure you get enough data points relevant to your local real estate market to avoid missing anything important. To narrow down your list, ask yourself these questions:

1) What type of properties am I looking at? What are the construction types?

2) How long have they been listed? How many days on market?

3) Is the sale price right? Do you need to make any price adjustments?

4) Does the listing look good? 

5) Do I know anyone who lives in the area?

6) Does the area have a history of growth?

7) Are there any special features or amenities?

8) Is there a lot of competition?

9) Will buyers see my listing?

How to Prepare a CMA

Now that you have a list of comparable properties, it’s time to dig deep. A straightforward CMA process can help real estate professionals streamline their 

Gather All Available Data for Subject Property

First, pull as much relevant data as possible for the subject property. For example, if you’re working on a single-family home, gather sales histories, square footage, number of bedrooms, bathrooms, etc. If you’re working on a multi-unit building, include unit size, rent amount, vacancy rate, etc. Make sure you look at the property in person when gathering information. 

Collect Historical Sales Information for Comparable Properties

Next, collect historical sales information for each property. This includes sale date, list prices, sales prices, days on the market, etc. Keep in mind that some properties won’t have sales records available, so don’t worry if you don’t have access to that data. Property values fluctuate, but an experienced agent will be able to adjust the historical information to the current market. 

Compare Your Listing With Other Nearby Properties

Once you’ve gathered all the necessary data, compare your listing with the other properties you found. Look for differences in the property details between your listing and those around it. These could be things like location, condition, age, etc.

Analyze Your Results

Once you’ve completed your research, analyze your results. Start by comparing the most similar properties to your listing. Then move on to more distant comparisons. Make a note of which ones were successful and why. Once you’ve analyzed your results, you should be able to confidently provide a price range to your prospective sellers.

Create a Marketing Plan

After creating a winning listing presentation, you’ll need to develop a marketing plan. There are several ways to go about this, but one of the best methods is to use a lead management system designed for a real estate agent. Lead management systems allow you to track leads, convert them into prospects, and follow up with them after they’ve expressed interest.

Prepare a Listing Presentation

You now have a better understanding of what sells in your area. Use this knowledge to create a compelling listing presentation. Don’t forget to add photos, videos, virtual tours, etc.

This basic overview should help you create an outline for your CMA. Now, we’ll discuss the best way to use the information you’ve gathered.

how to convert seller leads with a cma
If you use professional photography for marketing, make sure to point that out to your prospective sellers. Professional real estate photography performed by Virtuance sells homes faster and for more money.

How to Use Subject Property Data in Your CMA

The first thing you need to do when preparing a CMA is determine how much weight to give to each piece of data. Based on your experience, you can assign different weights to certain factors. For example, if the subject property has recently sold, you might want to give it more weight than a property that hasn’t been selling for years.

Use the data from your research to see how much the property may be worth. You’ve already found out the average price per square foot of houses in the neighborhood. You also know that the average selling price of homes in the area was $200,000. So, take those numbers and plug them into an equation to get a rough idea of how much the property may sell.

To do this, multiply the number of square feet of the subject property by the average selling price per square foot.

How to Use Subject Property’s Previous Sale Data in a CMA

Now that you know how much the property is likely to sell for, you can start looking at its previous sale history. The previous sale history will tell you whether or not the property is overpriced relative to its current value. It will also show you whether or not the seller has done anything to improve the property since the last time it sold.

How to Use Recently Sold Comparable Property Data in a CMA

If you find that the subject property is undervalued based on its recent sales history, you’re going to want to look at comparable properties that have sold within the past year. This will let you see how well the subject property compares to others that have sold recently.

Based on the data you collected during your research, you’ll be able to compare the subject property to other properties that have sold recently. If the subject property is significantly less expensive than these comparable properties, then you might consider lowering your estimate of the property’s value.

How to Use Active Listing Comparable Property Data in a CMA

When using active listings as part of your CMA process, you’ll want to make sure that the properties are similar enough to the subject property so that you don’t end up comparing apples to oranges.

For example, if you were trying to figure out how much one particular house would sell for, you wouldn’t want to include another house that just came onto the market. In addition, you want to make sure that both houses are located in the same general area.

You’ll also want to ensure that all the homes listed for sale are similar to the subject property. This means that they must be single-family homes with three bedrooms, two bathrooms, and 2,500 square feet of living space.

How to Use Market Trends in a CMA

The final way to use information about the subject property’s previous sale history to help you prepare a CMA is to analyze market trends.

This is where you’ll want to pay attention to things like interest rates, unemployment levels, and economic indicators such as GDP growth. These factors should affect the amount of money buyers are willing to spend on real estate.

How to Prepare the CMA Presentation

Once you’ve gathered all the necessary information, you’ll need to create a report or presentation that shows the potential seller exactly why they should list their property with you. Here’s an example CMA presentation:

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