What is a Current Market Analysis Home Price?
Get a FREE “Current Market Analysis”
When selling or buying real estate, what price is a “fair” price? One land auctioneer used to begin his auction sales with the words “We’re here to get as much as we can -you’re here to buy it as cheap as you can -what am I bid?” It was a down to earth way of saying that buyers and sellers have different viewpoints about price, but must finally agree if a sale is to take place. Mortgage lenders, appraisers and real estate agents use the term “fair market value” to identify what they believe to be a “fair” price. Fair market value is defined as “that price which a buyer is willing to pay and at which a seller is willing to sell, both parties being knowledgeable about the property and neither party being under any time pressure”.
A Current Market Analysis, “CMA”, is one method for determining fair market value. It is competitive.
You will be in competition with all the other sellers! It is a report which provides information about similar properties which are:
- “For Sale” at the present time,
- Already “Sold”, and
- “Expired Listings”.
Homes which are currently “For Sale” indicate what the Competition is asking. Although buyers have not yet agreed to those prices, they are one barometer of the Maximum potential price. Homes which have already “Sold” provide historic information about prices sellers have been willing to accept and buyers have been willing to pay. The more recent the sale, the more reliable the information. Appraisers only use sales which have actually closed.
Those listings which have “Expired” without selling are an indicator of what buyers are NOT willing to pay. If a home was listed for sale and did not sell, the price was likely higher than buyers were willing to pay.
Sellers may set their asking price, however buyers actually place the final value on them, as evidenced by their willingness to pay a particular price.
You can see that the “SOLD” prices are the ones that tell you the most. A few of the asking prices in the “For Sale” group will be quite a Lot higher priced. Most of the “Expired group will be a lot higher priced.
In another group, For Sale By the Owner “FSBO”, most of the homes will be a whole lot higher priced.
Most real estate agents are willing to give you a Free, no obligation CMA. An active, full time agent may be able to give you a fairly close price off the top of their head but, only a written “CMA” is able to provide accurate, up-to-date information in black and white on the local housing market.
By Steve Myers
All articles are for educational purposes only and are not meant as tax or legal advice! See a CPA for tax advice or an attorney for legal advice, or any other appropriate professional for the sector!
