Comparative market analysis (CMA)시세 분석

What is it?

A comparative market analysis (CMA) is a report in which a real estate agent estimates what your home would sell for in today’s market. It starts from the actual sale prices of similar homes that sold recently, then adds or subtracts for the ways your home is different (size, condition, location and so on) to arrive at a price range.

Sellers use it to set the listing price. Buyers use it to decide how much to offer. It is the agent’s opinion, not a legal appraisal, so two agents can come up with slightly different numbers for the same home.

Three different "values" for the same home

The same home can carry three different numbers. Who makes them, and why, is different.

The MPAC assessment is for property tax and can be far from today’s market value. Do not use it to price a home.

How is it made?

1. Pick the comparables (comps): homes of a similar size and type in the same neighbourhood (for condos, the same building) that sold in the last few months. Agents can see actual sale prices in the MLS® System.
2. Look at active and expired listings: what competing homes are asking now, and what prices failed to sell. An expired listing is a signal that its price was too high.
3. Make adjustments: turn each difference between a comp and your home (floor area, bedrooms, parking, renovations, floor level, view, road noise) into a dollar amount and add or subtract it.
4. Set the range: the adjusted numbers point to a range where the home should sell and a suggested listing price. The agent also looks at how fast homes are selling (days on market) and whether it is a buyer’s or seller’s market.

How adjustments work (example)

The table below is a made-up example to show the method. Real adjustment amounts depend on the neighbourhood and the time, and involve the agent’s judgment.

For illustration only. When the three numbers cluster at $1,110,000 to $1,120,000, the agent suggests a listing price based on that range.

What does "free home evaluation" mean?

Many agents offer a CMA at no charge to people thinking of selling. I do too. If I can see the home in person, I can include its condition and be more accurate.

"Free" means you do not pay for the report. It does not mean you must list with that agent. You only have a contract with an agent once you sign a listing agreement. Before you accept an evaluation, ask whether anything is expected in return.

Ontario’s advertising rules say that when an agent makes a promise or an offer, any conditions must be clearly stated. If you cannot see the conditions, ask.

What does the law say?

• Ontario’s Code of Ethics for real estate agents (a regulation under TRESA) says an agent must show reasonable knowledge, skill, judgment and competence when giving opinions, advice or information.
• An agent must make best efforts to make sure what they say is accurate and not misleading, and must not take part in misrepresentation (giving a false picture of the facts). Leaving out comps on purpose, or changing a sale price in a CMA, would break this rule.
• RECO’s advertising rules (RECO is the Real Estate Council of Ontario) say claims in advertising must be accurate and verifiable, and promises or offers must state their conditions clearly.
• Still, a CMA is an opinion. There is no program that automatically pays you if it turns out to be wrong. If you believe an agent broke the rules, you can file a complaint with RECO.

What to watch out for

• The agent who quotes the highest number is not always the best agent. Some quote high to win the listing. Always ask which comps were used and why.
• Comps should be sold homes. An asking price is a price nobody has paid yet.
• Old sales are less useful. When the market moves quickly, prices from a few months ago can be out of date. Using sales from the last few months is common practice.
• Within one neighbourhood, prices change from street to street, by school zone and by distance to transit. Look at the reasons for each adjustment, not just the numbers.
• Buyers can ask their agent for a CMA before writing an offer. It gives you a ceiling when you are in multiple offers.

Condos and pre-construction are a little different

Condos are easier to compare because one building has many similar units. The differences that matter are floor level, view, whether parking and a locker are included, and the condo fees. Recent sales in the same building are the best comps.

For pre-construction, there are no sold homes yet, so a normal CMA is hard. Agents look at resale prices of nearby new condos and sales in recently completed buildings. Always compare the builder’s price with what similar resale units nearby are selling for.

Example