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Serving Our Neighbors Builds Stronger Communities

What is a Real Estate Market Analysis?

A real estate market analysis, also known as a comparative market analysis (CMA), is an evaluation of the current real estate market conditions and the value of a specific property. It helps determine a realistic listing or purchase price by comparing the property to similar properties that have recently sold or are currently on the market. Here's an overview of how a real estate market analysis works:

  1. Gathering relevant data: The first step is to collect data on recent sales of comparable properties in the same area or neighborhood. These properties, often referred to as "comps," should have similar features, such as size, age, location, number of bedrooms, and amenities.

  2. Analyzing comparable properties: The next step is to analyze the data and compare the comps to the subject property. Factors considered include the sale price, days on market, size, condition, upgrades, and any unique characteristics that may affect value.

  3. Making adjustments: Since no two properties are identical, adjustments are made to account for differences between the comps and the subject property. For example, if a comp has an extra bedroom compared to the subject property, an adjustment is made to reflect that difference in value.

  4. Determining a value range: Based on the analysis and adjustments made, a value range is determined for the subject property. This range indicates a realistic price that buyers are likely to pay in the current market conditions.

  5. Providing a market analysis report: The findings of the analysis are typically compiled into a market analysis report. This report is often prepared by a real estate agent and includes the sold and active comparable, adjustments made, and the suggested price range for the subject property. The report can be used by sellers to set a listing price or by buyers to assess the fair market value of a property.

A real estate market analysis is an essential tool for both buyers and sellers. For sellers, it helps determine an appropriate listing price that attracts potential buyers and maximizes the chances of a successful sale. For buyers, it provides insights into the fair market value of a property and helps in making informed decisions about their offers.

It's important to note that a real estate market analysis is an estimate and should not be considered an appraisal. If a formal appraisal is needed, it's advisable to hire a professional appraiser who can provide a comprehensive valuation of the property.