A Comparative Market Analysis is a common tool used in the real estate industry to determine a fair market price for a property. It uses current and past price trends to narrow down a competitive price range for a new listing. A CMA helps sellers determine a fair price for their listing and helps buyers submit competitive offers so that they don’t overpay.
Nothing better demonstrates your knowledge and competence better than a well-presented CMA however, creating an accurate one is not an easy task. It takes time and practice to effectively capture market trends and present this to your clients. But, do not worry! In this article, we take you through a step-by-step guide on creating a great CMA which will impress any homeowner or property seeker.
Step 1: Gather Data On Your Property
Make sure you have an in-depth understanding of your client’s property. This data will be used to compare your property to others on the market and properties which have recently sold.
The better you know your property, the easier it will be to gauge its value in the market. Take note of every detail of your property, particularly features which can increase or decrease its value. This includes its proximity to facilities, schools, clinics, etc., as well as details on the property itself, such as:
- Number of bedrooms and bathrooms
- Square footage
- Project construction year
- Floor plan
- Balcony view
- Renovations
- Interior upgrades
These details will help you find comparable properties which are either currently for sale or recently sold.
Step 2: Gather Last Sold Transaction Data On Previous Listings
The best way to understand how the market has been performing is to look at what properties have been moving and which properties have remained unsold. This can be done using last-sold transaction data from the DLD, which is readily available on Profolio™, our state-of-the-art listing management software.
Simply click on the ‘Transactions’ section under the ‘Insights’ tab and input your property details. The most comparable sales are those sold in the last six months with similar areas, layouts and views. You can also identify cross-selling opportunities but looking at surrounding buildings and communities.
In addition to past transactions, we also recommend looking at the total sales volume and total sales value in your area. These metrics help you understand how your area is performing and what demand is looking like.
Step 3: Research The Price And Availability Of Current Listings On The Market
Now that you know how many properties have sold in the past, you can look at active listings on Bayut to see if there are any price movements and how your listing compares with current listings on the market.
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Active listings are a critical element of CMAs, it shows your client what their current competition is and how much competition they would face at different price ranges.
Step 4: Evaluate Market Performance And Trends
After analysing properties sold in the past and current listings in the market, it’s time to look into what’s currently happening in your market. Using Market Insights on Profolio™, you can view statistics on popular areas, popular property types and ROI. Study your area to understand what’s moving and what property seekers are looking for.
While you should understand what properties are moving in your market, it is just as important to gauge which properties are NOT moving. This shows where there is less demand and what price points the market does not support.
Once you have an overall understanding of price trends and the current listings for sale in your area, you can look into micro trends, these are any changes which can affect the price of your property. Start by asking yourself, “Is there anything in the area that would increase or decrease the value of my listing?”. For example, new construction that blocks your balcony view will reduce your property’s value even if other properties in the area are moving. Similarly, the construction of a new tennis court could increase your property’s value.
Based on this data, you can narrow down an appropriate price range for your property. Depending on what you have analysed, the price of your property may be lower or higher than similar listings in the area.
Step 5: Present Your Analysis In A Professional Manner
Your hard work is now done, and you now have all the elements needed to create a fantastic CMA. All that’s left to do now is present your findings to your client. Our handy CMA template helps you summarise your data in one easy-to-understand page so that you save time and impress your clients.
Our CMA Template is divided into three sections
- Section 1 – Property Details
- Section 2 – Recently Sold Properties
- Section 3 – Active Listings
It’s time to start creating stellar CMAs! If you found this article helpful, check out our many resources focused on the real estate industry on our Content Corner. We also recommend registering for a session at Bayut Academy, where we run a series of workshops to help you acquire the skills needed to succeed in the real estate industry.