BUSINESS NEWS - The Comparative Market Analysis (CMA) has been around for a long time and by now, most home sellers know that they should ask their agent for one before deciding on an asking price for their property.
But many still don’t really know how much information should actually be included in a CMA – or how to interpret it and use it to their advantage, says Jan Davel, MD of the RealNet estate agency group.
“A CMA should consist of at least three important components,” he says “starting with a list of similar properties that are currently for sale in the same area and surrounding suburbs, and their asking prices. This is crucial, especially in the current market when sellers have to price exactly right if they want to be competitive in attracting prospective buyers.
“Everyone is feeling the financial pinch at the moment and buyers are naturally going to compare listings and show more interest in lower priced properties than those they regard as expensive, especially if they appear similar. They cannot judge the condition of the home or see the great finishes the sellers may have put in unless they can be persuaded - on the basis of price - to view the property in the first place.”
Secondly, Davel says, the CMA should list the properties recently sold in the area, and the actual selling prices obtained.
“It is very important for sellers to remember that just because a property is on the market for a certain amount does not mean that it is going to sell for that price.Buyers make lower offers on homes and sellers accept those lower amounts every day – although you probably won’t hear about it from your friends, neighbours or colleagues at work because no-one wants to admit they had to drop their price in order to sell.
“The latest FNB Property Barometer shows that more than 80% of sellers in the current market are in fact accepting offers that are about 10 or 12 % less than their asking prices in order to achieve a sale – and homeowners who don’t want their properties to spend too long on the market need to bear this in mind.”
Which is why, he says, the third set of information the CMA must show is the listingtimes – or time on market – for the properties recently sold in the area, as well as their initial asking prices and eventual selling prices. “Reviewing this information will give property sellers a clear indication of where buyers are currently drawing the line and starting to show price resistance.
“Significant resistance will be indicated by a long time between the initial listing and the property actually being sold – or perhaps being taken off the market without being sold.On the other hand, by using the homes with the shortest listing times and their actual selling prices as a guide, sellers and their agents should be able to set a market-related asking price that will ensure immediate buyer interest and a swift sale.”