When a client is looking to sell his home a real estate professional will use a comparative market analysis to help determine the listing and sales price of the home in the current market. A comparative market analysis compares homes that have sold in the last six months or so and homes that are currently on the market.
Factors Used in a Comparative Market Analysis
A real estate professional, or broker, will use certain factors when determining the price of a home. The first factor that is used is the location, the city or town, that the property is in. The broker will also use the age of the home, the square footage, the number of bedrooms and bathrooms, the amenities and any upgrades or recent renovations or updates that have been made to the home. Sometimes other factors are used such as if the home has a basement or which school district the home is in.
Homes That Have Recently Sold
It’s important for a real estate professional to use comparable homes that have sold in the past six months or so in his comparative market analysis. An appraiser will also use the most recently sold comparable homes when it comes time for an appraisal. This will give the seller an approximate price at which the home can be sold in today’s market. The broker should price the home a little higher to take into consideration the market’s negotiation rate. For example, if houses are typically selling 3-5 percent off of the listing price, then the home should be priced that much higher than the approximate sales price.
Homes That Are Currently on the Market
A broker should also use the homes that are currently on the market is his comparative market analysis. This will show the seller what the competition is. The competition should be taken into consideration when pricing a home for sale. The more homes on the market the more difficult it may be to sell the home at an aggressive price. In this case, it may be better to price the home more conservatively.
More information can be found here about how a real estate professional will use a comparative market analysis to determine the price of a home: