Competitive vs. Comparative Market Analysis - they aren't interchangeable

Which approach is the most effective?  

I regularly hear real estate agents use the terms Comparative Market Analysis and Competitive Market Analysis interchangeably when discussing pricing or assessing the fairness of the price of a home under consideration for purchase.  It should be noted that these terms are not the same and have different uses for buyers and sellers and you should have some knowledge of the differences when discussing pricing with your real estate agent.

Comparative Market Analysis emphasizes the closest comparable listings and sales from recent months. This comparative market analysis is a high level study done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.  

The Competitive Market Analysis approach is more in depth and considers factors such as market indicators, timing, financing and the number of competing homes on the market (demand vs. supply).This method shows a picture of the competition... or the homes that a buyer will view along with the subject property. Viewing a competitive price line will help you to price your home in the best position.  We know that buyers will comparison shop.  What position do you want your home to be in? Also a seller must be aware of the absorption rate.  In other many months of inventory is currently available for sale in a specific area and price range.  This is a key to knowing where to price your home.  If there is very little competition, and history shows that in the past year there have been a number of homes per month sold in that same price range and market area, the seller may be confidant enough to edge the price up a bit. A knowledgeable and experience agent will be able to help you determine the best price to list your home by offering you a Competitive Market Analysis.

Remember that all markets are different and are continuously changing.  You will need to hire an experienced agent/broker if you want to make the most of pricing and acquisition cost for current market conditions.

Call 260-740-HOME for more information.

Jerry Morrow

Jerry Morrow

Century 21 Affiliated - REALTOR - Associate Broker
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