Running a Comparative Market Analysis (CMA)

Running a Comparative Market Analysis(CMA).

Pulling comparables is effectively the same as performing a comparative market analysis, or CMA. Comps can be found in a variety of locations, including Zillow and Trulia. The most important thing to keep in mind is to receive your information from a trustworthy source.

WANT TO LEARN MORE ABOUT REAL ESTATE MARKET ANALYSIS?

Before you start investing in real estate, be sure you know how to compare markets and properties. We'll walk you through all the numbers you need to know, whether you're trying to select where to invest or simply comparing similar homes.

We illustrate the processes you must take and the facts you must know, from calculating ARV's and repairs to finding buyers and doing comparative market study.

Start by browsing at nearby homes that have recently sold within the last six months. The more up-to-date the data, the better. When calculating ARV, you want to find properties that are as similar to yours as possible—but updated. If you can discover at least three, that's fantastic. Subtract the number of bedrooms and bathrooms, as well as the square footage and lot size from the total. This is an excellent spot to begin your search.

Price per square foot

Many experts advise utilizing price per square foot for calculating ARV. To get the price per square foot of comparable homes, simply multiply the sale price by the square footage of the home.

The price per square foot for a residence with 1,000 square feet and a price of $100,000 is $100.

The cost per square foot varies significantly depending on where you reside, both in terms of city and, in some cases, neighborhood. That's why we look for comparables as near as possible to the home in question.

How Do You Calculate After Repair Value(ARV)?

Now that we have some comparable sold home values in price per square foot, we can calculate our property's ARV. The formula is simple: divide your property's square footage by the average price per square foot.

Using the previous example's price per square foot, our home's estimated after-repair value would be $120,000 if it was 1,200 square feet.