By this stage most of us know that we should ask the agent we employ to supply a comparative marketing analysis (CMA) when selling our homes. But what is a CMA and can it really help to price a property realistically?
The short answer is yes.
A CMA will consist of a number of components, including what similar properties are currently for sale, and at what price. In addition, the report will indicate what has been sold in a certain area and the price the seller obtained. The CMA should also contain the details of the home as well its transfer history. In addition to the data collected, the estate agent who is putting the report together will inspect the home and will list the condition of the property and highlight the selling points.
It is absolutely vital 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. For some strange reason, there are many buyers who assume that because a home is being marketed at a certain price, it is a done deal and the property will indeed sell for at that figure. Sadly, more often than not, this is not the case. Buyers make lower offers on homes and sellers accept those lower amounts every day. You are just unlikely to hear about it, because no one wants to admit that they have had to drop their price in order to sell.
Comparing what is currently on the market and at what price in any given area is crucial. Competition may be considered healthy, but in a buyer’s market when there are numerous similar properties for sale, it can prove to be extremely problematic for sellers. A good example of this is when there are a number of units for sale in a particular apartment block. Let’s say, for example, that four units of similar size are being sold for R500 000. A potential seller argues that his unit has better finishes than the others and puts his home on the market for R650 000. We are all human and therefore driven by emotion, but unfortunately, common sense has to play a significant role when marketing a home. It is logical that buyers are going to show more interest in the lower priced properties and shun the more expensive listing.
Taking a look at what has been sold in an area over the past year or two also offers sellers a good idea of what buyers are willing to spend. Savvy buyers ask to see this information too and will make an informed buying decision based on the findings. Again we say, it does not matter what the seller paid for the property or how much he wants to pocket, what counts is what a willing buyer is prepared to pay for the home.
There are many sellers who do not take the advice given by their agents and who market their homes at an inflated - or at least unrealistic - figure. Any serious seller worth his salt will not base a selling price on pipe dreams. He will know what is going on in his area, know what is selling and what isn’t and price his home at a level that will attract buyers.
Speak to local agents and ask them to supply a detailed CMA, outlining all of the above. An agent who understands local conditions and can back this up with solid evidence is more than likely going to sell your property a lot faster than one who promises the moon, but who can’t back those promises with facts and figures.