How to Conduct a Comparative Market Analysis

What is a Comparative Market Analysis?

A Comparative Market Analysis (CMA) is an evaluation of a home's value based on the sale prices of similar properties in the area. It helps in setting a competitive listing price, making informed offers, and understanding market trends.

Step-by-Step Guide to Conducting a CMA

1. Gather Property Information

Start by collecting detailed information about the subject property. This includes:

• Address
• Property type (single-family home, condo, etc.)
• Square footage
• Number of bedrooms and bathrooms
• Lot size
• Year built
• Unique features and upgrades

2. Identify Comparable Properties (Comps)

Select properties that are similar to the subject property in terms of:

• Location: Ideally within a 1-mile radius or within the same neighborhood.
• Size: Similar square footage, typically within 10-20% of the subject property.
• Age: Built around the same time period.
• Condition: Similar condition and style.
• Sale Date: Sold within the last 3-6 months to reflect the current market.

3. Analyze Comparable Sales

For each comparable property, gather the following details:

• Sale price
• Sale date
• Days on market (DOM)
• Listing price vs. sale price
• Property condition at the time of sale

4. Adjust for Differences

No two properties are exactly alike. Adjust the value of the comparables to account for differences. Common adjustments include:

• Square footage: Adjust based on the average price per square foot in the area.
• Number of bedrooms and bathrooms: Consider local preferences and demand.
• Lot size: Larger lots may command higher prices.
• Upgrades and condition: Modern upgrades and well-maintained properties typically sell for more.
• Location: Adjust for desirable features such as proximity to schools, parks, and amenities.

5. Calculate the Adjusted Value

After making adjustments, calculate the adjusted sale price for each comparable property. This gives a more accurate comparison to the subject property.

6. Determine the Market Value Range

Based on the adjusted values of the comparables, determine a value range for the subject property. This range provides a realistic expectation of what the property might sell for in the current market.

7. Consider Market Trends

Analyze broader market trends to fine-tune your analysis:

• Current inventory levels
• Price trends over the past 6-12 months
• Local economic conditions
• Seasonal trends in real estate activity

Michigan Market Considerations

Michigan's real estate market has unique characteristics. Here are some specific considerations:

• Seasonality: Michigan's market tends to slow down in the winter months due to harsh weather conditions, with spring and summer being peak selling seasons.
• Local Economy: Areas with strong job markets, such as Detroit and Ann Arbor, often see more robust real estate activity.
• Neighborhood Characteristics: Michigan has a diverse range of neighborhoods from urban to suburban to rural, each with its own market dynamics.

Tools and Resources

To conduct a thorough CMA, leverage the following tools:

• Multiple Listing Service (MLS): Provides detailed information on recent sales and active listings.
• Public Records: Access property tax records and sales history.
• Real Estate Platforms: Websites like Zillow, Redfin, and Realtor.com offer data on recent sales and market trends.
• Local Real Estate Associations: Organizations like the Michigan Association of Realtors offer market reports and professional insights.

Conducting a Comparative Market Analysis is an essential skill for real estate professionals in Michigan. By carefully selecting comparables, making appropriate adjustments, and considering local market trends, you can provide accurate and valuable insights to your clients. Whether you're pricing a home for sale or advising a buyer, a well-executed CMA ensures informed and confident real estate decisions.

For more personalized advice and professional CMA services, contact CRE Group in Michigan. Our experienced team is here to help you navigate the complexities of the real estate market with expert guidance and local knowledge.

Bransco Properties

616.299.6846 | bransco@kwcommercial.com | 4301 Canal SW Grandville, MI 49418