Market Analysis Explained

What is a Comparative Market Analysis?

This is research that helps determine the fair market value of a home.  This comparison uses the most current and reliable information from the Multiple Listing Service (MLS).  The homes included in the research are similar homes in the area that are currently for sale or that have recently sold.  This will provide the base line from which the comparison will begin.  There are other factors that are taken into consideration, such as the features and condition of each home. 

Your real estate professional will be able to provide the homes that were used in their research to determine the suggested list price of your home.  Please keep in mind that the market changes daily and that the goal is to figure out what a buyer is likely to pay for your home based on the activity in your area.  For this reason, the list price may need to be adjusted during the listing period if the current marketing activity suggests any change. 

As we prepare the market analysis for our clients, our research goes back a few years. We do this to determine the pattern and consistency of home sales in their area. We then select similar homes with recent activity to determine if the trend of years past has continued.  This gives their home's suggested list price the stability it will need as we begin negotiating on their behalf when offers are presented.  We freely offer the buyer's agent the research used to determine the list price and in most cases, our clients are able to obtain very close to the list price.  This is called "List to Sell Ratio".   

It is never beneficial to price your home for more than the true market value.  Many sellers will request to list it 'high' in the beginning.  The results are not pleasing.  The moment your home is entered into the MLS, it will receive the most exposure!  Many buyer services, such as Listingbook®  will notify them of a new listing which matches their criteria.  Many agents who are watching the market for homes that fit their buyer's criteria will see the listing.  If your home is priced above the realistic market value, it will be missed by these actual buyers.  This is the time to take full advantage of your "just listed" status! 

To put is simply, a home that is properly priced and marketed will sell.  If it is over-priced, it will not.  In most cases, over-pricing results in a 6 month listing that eventually expires without selling.  It may also lead a buyer to wonder what is "wrong" with it and why it didn't sell.  You do not want your home to suffer from these impressions. We have successfully SOLD homes that had previously expired from past listings, so we know first hand that homes can have this impression.  

Factors that determine the market value:

• Location
• Condition
• Price
• Market Competition 

Factors that have NOTHING to do with market value:

• How much you owe on your home
• How much you paid for your home
• How much you hope to receive as net proceeds

Make sure you feel comfortable with the facts that are given to you from competing agents.  If they are unable to provide and explain the facts that were used to determine the suggested list price, you have just seen your first red flag!    Please read the section Seller Warnings for more on this subject.