Posted in Finance, Accounting and Economics Terms, Total Reads: 93
Definition: Comparative Market Analysis
Comparative Market Analysis is the study usually done in housing market to find the price of a house through exploring the prices of similar properties that are sold in that area. When the analysis is done it should be done on properties of same size, same location and during same time period. It helps to find the price prevailing in the market for the similar property. It is an important aspect for both buyer and seller of the house.
The seller should know what price should he/she expect from the market. The seller should have all the information about the property before putting his property for sale. On the other hand, for the buyer Comparative Market Analysis is equally important as the buyer have to determine whether the price quoted by seller is apt according to property. So it is important for both buyer and seller to have fair information so that nobody can take advantage of each other. It is also done to know whether the property is worthy i.e. the value of property is increasing or not. It evaluates the listing and selling price of the property i.e. what people get from the property and what are they actually expecting.
CMA can be totally objective that involves taking into consideration the number of bedrooms, the size, etc. or can be subjective which involves the design and the construction but it is usually limited to the locality where the property is.
The analysis is usually conducted by the property dealers or agents but is for limited period so it is conducted again and again. Comparative Market Analysis should tell at what price the properties are sold in that location and how much time it actually takes to sell a property.
The Comparative Market Analysis should have following information
• The properties that are currently put into market for sale
• The properties that are sold in the market in last 1 year
• The properties that are not finally sold but are in contracts to be sold soon
• The properties that are not yet sold or reasons for properties that are removed from the market.