If you’re a savvy real estate professional, you understand that performing a comparative market analysis (CMA) is crucial for accurately valuing properties. Often called a rent survey for multifamily units, a CMA helps determine a property’s market value by comparing it to similar properties. Worried about expensive data sources? Don’t be! This article will explain what a CMA is, guide you on how to conduct one effectively, and reveal the best free sources for obtaining CMA data.
Understanding Comparative Market Analysis (CMA)
A Comparative Market Analysis, or CMA, is a detailed report prepared by real estate agents and appraisers to estimate a property’s market value. This estimation is based on recently sold, comparable properties in the same geographic area. The CMA process involves a thorough comparison of various factors, including the property’s location, size, condition, and amenities. Crucially, CMAs also consider any recent renovations or upgrades, providing a comprehensive view of what potential buyers might be willing to pay.
For sellers, a CMA is an invaluable tool to understand their home’s worth in the current market, aiding in setting realistic pricing and effective marketing strategies. For buyers, CMAs offer critical insights into whether a property is fairly priced or if they should explore other options for better value.
Before listing a home, obtaining a comparative market analysis from a real estate agent or appraiser is highly recommended. This provides a solid foundation for pricing decisions, ensuring you neither underprice nor overprice your property. Having CMA data during negotiations also strengthens your bargaining position.
Step-by-Step Guide: How to Conduct a CMA
Performing a CMA requires diligent research and a systematic approach. The initial step involves identifying properties comparable to yours in terms of size, age, location, and features. Subsequently, you need to gather data on these comparable properties – including both their listing and final sale prices – and analyze this information to derive an accurate valuation for your property. Knowing how long comparable properties remained on the market can also provide insights into whether they were initially overpriced or undervalued.
While engaging a real estate professional to create a CMA report offers access to more extensive data and expertise on local market trends, you can still conduct a CMA yourself. Utilizing publicly available data sources and a spreadsheet, you can perform a competent analysis. Here are the essential steps to completing a CMA:
Analyze the Neighborhood:
Begin by thoroughly understanding the neighborhood where the subject property is situated. Identify key features such as local amenities, the quality of schools, desirable streets, overall curb appeal, and any potential drawbacks like proximity to busy roads or train lines.
Evaluate the Subject Property:
Develop a detailed profile of the subject property. Document its age, lot size, square footage, layout, architectural style, condition, landscaping, and any upgrades or renovations. This information is often organized in a side-by-side grid format, ensuring consistent data points across all properties being compared.
Select Your Comparable Properties:
Identify three to five properties that closely resemble the subject property and have been recently sold in the vicinity. Ideal comparables are those sold within the last six months, similar in size, style, quality, and construction, located within the same school district, and ideally within a one-mile radius. The selection of appropriate comparables, often referred to as “comps,” is paramount to the accuracy of your CMA. Poorly chosen comps can lead to inaccurate valuations, potentially causing a buyer to overpay or a seller to undersell. Here are best practices for selecting comps:
- Exclude properties with significantly higher or lower sale prices than the average. These price variations usually have specific reasons, such as cash-discounted sales or seller concessions for repairs. Including these outliers can distort your analysis.
- Prioritize comparable properties geographically closest to the subject property, ideally within the same neighborhood. While arguments can be made for using comps from demographically and economically similar neighborhoods, traditional appraisal practices prioritize geographical proximity.
- Use comps with recent closing dates. Real estate market data is dynamic, especially in active markets. Appraisers typically consider data from the last six months, but more recent data is always preferable.
- Ensure the characteristics of your chosen comparable properties closely mirror the subject property to minimize errors in value adjustments. Comparing a newly built home to one constructed in the 1960s, even if on the same street, is not advisable.
Adjust for Differences Between the Comps:
Compare the subject property against each comparable property, making adjustments for any significant differences. While sophisticated appraisers may use regression analysis for precise adjustments, you can estimate the value contribution of specific features and adjust accordingly. For instance, if finished basements are valued at approximately $25,000 in your market, and your comparable properties have finished basements while the subject property does not, you would deduct $25,000 from the comparable properties’ values for a more accurate comparison.
Calculate Price Per Square Foot:
After making necessary adjustments, calculate the price per square foot for each comparable property. Divide the adjusted sale price by the property’s square footage. Then, calculate the average price per square foot by summing the price per square foot of all comps and dividing by the number of comparables. Including median and average prices, both overall and per square foot, in your CMA grid enhances its analytical value.
Determine the Subject Property’s Value:
Finally, to estimate the subject property’s fair market value, multiply the average price per square foot derived from the comparables by the subject property’s square footage. This calculated value might require further adjustment based on the degree of similarity of the chosen comparables and current real estate market trends.
Best Sources for Free CMA Data
By considering factors like size, age, location, and features, and by analyzing recent sales data, a well-executed CMA empowers both buyers and sellers to make informed real estate decisions. But where can you access the necessary data for a CMA without incurring costs? The Hello Data team recommends these top four free resources for CMA data:
Zillow Zestimate Tool
The Zillow Zestimate tool is not only for homeowners curious about their home’s value. Real estate professionals can also leverage it as a valuable source of Free Real Estate Comparative Market Analysis data. This tool provides estimated home values based on publicly accessible information and recent sales data. It also offers historical home value trends, which can be particularly useful for analyzing potential investment properties.
Realtor.com
Realtor.com is another excellent free resource offering robust CMA data to real estate professionals. The website provides comprehensive market reports, including sales trends, median listing prices, median sale prices, and more. Its search functionality allows users to explore properties in specific locations and compare them side-by-side, facilitating a deeper understanding of individual property values within the broader market context.
Redfin Estimate Tool
The Redfin Estimate tool is a further valuable source for obtaining free real estate comparative market analysis data. Similar to Zillow and Realtor.com, Redfin provides estimated home values derived from public records and recent sales data. However, Redfin also incorporates unique features such as a “Heat Map,” visually representing home sale prices across different neighborhoods nationwide, and “Insights,” offering detailed information about local school districts and neighborhood amenities.
RentSource.ai
Hello Data’s Rent Source API is designed to deliver real-time pricing, availability, and property data directly to your real estate technology platforms and market analyses. By simply providing an address, RentSource.ai aggregates listings from numerous internet listing sites and utilizes the Google Places API to gather comprehensive information on your subject property and comparables. This includes data on asking rent, property value, year built, unit availability, amenities, building features, and nearby locational amenities. Furthermore, RentSource.ai can integrate data directly into your Excel models, eliminating manual copy-pasting. Whether you are preparing a CMA or a multifamily rent survey, explore the free demo of RentSource.ai today to streamline your CMA process.
Accessing high-quality CMA data doesn’t need to strain your budget. Utilizing these four free sources of CMA data allows you to quickly gain valuable insights into the current real estate market without any financial investment or time-consuming manual research. Begin leveraging these free resources to enhance your real estate analysis today!
Automatically Source Real Estate Data for Your Rent Surveys with the Rent Source API
The Rent Source API is designed to enhance your single and multifamily CMAs by automatically adding real-time rent, availability, and property data. Using just an address, RentSource.ai can extract data on asking rent, property value, year built, unit availability, amenities, building features, and locational amenities for your subject property from various internet listing sites and the Google Places API. RentSource.ai data seamlessly integrates with Excel, saving significant time otherwise spent on manual data entry. Discover more about RentSource.ai and other Hello Data products through the resources provided.
