Whether you’re listing a property, making a purchase decision, or appraising, getting the right price from the start is the most important step. Many of us have the market knowledge and the analytical know-how to look at a list of sales and decide which make the best comps. But where do you go from there? How do you conduct a thorough comparative market analysis (CMA)?
A market analysis should include a calculation of the price per square foot based on the market you’re in. Most CMA tools use arbitrary adjustment values or rely on the user to provide adjustments, which often turn out to be hit or miss, or at least not derived from market data.
A market analysis should also include the best-sold comps for your subject property. These comps should be geographically close to the property, have sold recently, and be most similar to the subject property in terms of characteristics.
How Many Sales Should I Pick?
Three to five comps are usually enough to perform an accurate market analysis, and the sales should be as similar to the subject as possible. It’s also good practice to pick some sales that are slightly smaller, and some that are slightly larger in order to get the best cross-section.
How Accurate Will Your Market Analysis Be?
The phrase “garbage in, garbage out” is apt here. A market analysis relies on the quality of data used. This means that if you choose your comps poorly (choosing sales that are very far from the subject, much bigger or smaller, not sold recently, etc.) then the calculated value will not reflect the market. Also, the more active the market, the better the adjustments typically are.
How Does ATTOM Help?
ATTOM’s property data facilitates the most accurate determination of a property’s value using CMA. For those who just want a value without any effort, there are multiple automated valuation models available in our property reports. ATTOM’s Assessor Market Values show an estimate of a property’s value based on a reassessment of a home’s property tax evaluation. ATTOM also offers an advanced property automated valuation model (AVM) based on robust market data to give you the most accurate property valuations.
