Tuesday, October 5, 2021

How to Read a CMA

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Comparative Market Analysis (CMA) reports can measure a variety of property types. The goal is to always compare a "subject property" to a "like-kind" property. 

Like-kind properties are single-family, ranch, townhouse, condominium, duplex, triplex, multiplex, etc. Additionally, the CMA aims to find properties that are similar in size, age, location, number of stories, pool or not, subdivision, elementary school attendance area, and composition (wood, brick, adobe, etc.) to the subject property. 

Once the basics are close, minor adjustments can be made for upgrades such as floors, stone counters, sprinkler systems, etc. 

The main categories viewers are likely to see on CMAs are:

• Active Properties - are currently for sale. Because real estate is negotiable, this is often a "wish we could get" number. In super hot markets, this can be deliberately low to create a bidding war for the highest offer in the shortest time. 

• CDOM (last column) - literally means the “cumulative days on market.” A high number of days on market can indicate a problem with the price (most often), location (next to a highway or airport) or the property itself (condition). However, it could also mean the seller is reluctant or too busy to release the property. 

• Coming Soon Properties - are NOT currently for sale. They cannot be shown to the public until they become Active. Nonetheless, buyers can send "blind offers" to purchase the properties while they are in this status without ever seeing the property in person.  

• Active Option Contract Properties (0-7 days typically) - have executed a contract and are currently conducting due diligence inspections and settling some negotiation points. These are essentially off the market unless something goes wrong with buyer financing or the house condition during inspection.

• Pending Properties (0-45 days) - have settled most negotiations and await resolution of some actions such as title, finance, repairs, etc. before closing.

• Sold/Closed Properties (0-90 days typically) - are exactly what you would expect. They are the strongest indicator of market value of homes entering the same market because these are examples of what the market has recently paid for similar homes. 

• Active Contingent Properties - are properties where the sale is contingent on some other action happening such as financing approval. 

• Active Kick Out Properties - are also properties where the sale is contingent on some other action happening (typically the sale of the Buyer’s house). However, the contract allows the seller to cancel the contract if another buyer makes a better offer during the contingency period. The first buyer must move forward within a very short period (typically 2 days) to prevent being kicked out of the agreement.

• Expired Properties (0-90 days) - are properties that – for whatever reason – didn’t sell during the time it was marketed. 

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Welcome to the DFWmark Blog! This is a collection of content by Mark M. Hancock, a REALTOR with Keller Williams North County in Celina...