The Truth About Pricing Your Home
Comparables (or Comps) refer to data about properties that are comparable in type and size to those of interest to a buyer or to the property a seller wishes to list. This data may consist of past property prices and information or list prices and data on current listings. The method applies to capital values; the comparison method of valuation is used mainly for residential property.
A CMA is what real estate professionals use as an evaluation of comparable recently sold homes in the area. It is very important to define the criteria for choosing comparable homes. The wrong comparables equal the wrong price range. A good comp uses appropriate parameters: Type, Size, No. of bed & baths, School district/Neighborhood, Lot size, Date of sale.
Agents will usually drive by their comps to get a visual and a feel for the neighborhood as well as condition of the house. Additionally, they create summary stats like price per square foot. To calculate a fair value range for your target home, agents will multiply the average price-per-square-foot of your comparables by the square footage of your target home. This will provide a baseline for the market price. Then, if the target home has characteristics that make it more or less desirable, an adjustment to the value is made (up or down) to account for them. A full and detailed report to listing prospect/client can not be complete without a similar market analysis of the properties listed and competing with their home at the time.
BUT, no matter what anyone tells you, the truth is, until your house is sold nobody can guarantee what it’s worth or what it will sell for.