Get cozy with a Comparative Market Analysis (CMA)

A Comparative Market Analysis (CMA) offers the best insights into a home’s fair market value. It compares the home under consideration with similar nearby properties that have been recently sold or are still on the market.

Getting a CMA from a knowledgeable agent is critical – they understand the complexities of the market and can provide accurate valuations. Remember, the devil is in the details. The best CMAs look at current sales of properties that are most alike in terms of size, condition, location, and amenities.

Check the time on the market

The time a property spends on the market can be a good indicator of inflated pricing. As a rule of thumb, if a home is up for sale for considerably longer than other properties in the area, it might be overpriced. Local market conditions play a big role in the time it takes to sell a home, but don’t ignore an excessive listing duration.

Appraisal vs. listing price

An appraisal is an unbiased estimate of a home’s value provided by a licensed appraiser, differing from the listing price, which is what the seller hopes to achieve. An appraisal lower than the listing price can be a warning sign of an overpriced home.

This can be problematic, especially if the appraisal process takes place well into the purchase process, potentially causing delays or re-negotiations if the lender refuses to cover the inflated cost.

It’s what’s on the inside that counts

Fancy curb appeal might catch your eye, but it’s important to consider both interior and exterior upgrades when assessing a home’s value. A well-maintained garden is fantastic, but a new HVAC system or a renovated kitchen can offer more value.

If a home’s price is significantly higher because of certain upgrades, ask questions. Learn more about the nature of these improvements and whether they truly justify the asking price.

There’s no crying in pricing

Sometimes, sellers have a deep emotional attachment to their homes that results in “emotional pricing”. It means the price is more reflective of the seller’s sentiment rather than the home’s actual market value.

Armed with a CMA, you’re better prepared to negotiate and avoid paying an “emotional premium”. Be understanding of the seller’s situation but also be mindful of your budget.