| Researching The Comp’s – Comparative Market Analysis (For Buyers)
When buying a home, researching comparables (comp’s) is one of the most important tasks to determine a fair price. A buyer’s agent will typically use sophisticated software and local expertise to provide what’s called a Comparative Market Analysis (CMA) report.
A CMA is a detailed report that compares a home to other similar properties in the same area to determine its fair market value. To produce an effective CMA, local knowledge is critical. The buyer’s agent must be familiar with the neighborhood and have knowledge of both historical and current sale values of real estate there.
To research comp’s, look for sold properties in your neighborhood that are comparable to the property you’re interested in, rather than list prices. Comps should be as similar as possible in position, style, age, condition, internal size, rooms, bathrooms, land size, gardens, parking, date of sale, etc. Your buyer’s agent should make adjustments for any differences between the sold properties and the property you’re considering.
The CMA provided by your agent should include the addresses of the comparable properties, sold prices, sold dates, land size, a photo and style of each property, total square meterage, dollar amount per square meter, number of bedrooms, baths, and garages. The final price calculated as a fair value should also take into account unique features, local inventory, interest rates, and market competitiveness at the time.
When researching comps, more weight should be given to sold properties over listed properties since listing prices only reflect what the seller would like the property to sell for. If the property you’re considering is unique and doesn’t have many comparable properties, consider having an independent professional valuer provide a valuation.
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