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To sell, your house has to prove its value to three people: the buyer's agent, whose job it is to scout for the best homes in the buyer's price range, the buyer, who selects from these homes, and the lender, who decides whether the home is actually worth the price.
Your real estate professional will take all this into consideration when helping you set the list price. To do this, your agent will create what is commonly referred to as a Comparative Market Analysis, or CMA.
A comparative market analysis allows your agent to analyze your most up-to-date local market conditions by factoring in those houses that have recently sold; houses that have recently been placed on the market, or "listed"; houses that have expired or have been withdrawn from sale, and houses that are under contract -- or "pending."
Let's look at each:
Active Listings: these are listings that are currently on the market. Some sellers make the mistake of looking strictly at active listings as a basis for setting their list price. The problem with this strategy is that the only thing we know about active listings is that they have not sold. So while knowing what your competition is selling for is part of the puzzle, it's not the only piece.
Withdrawn and expired listings are much like active listings. These homes haven't sold either after being on the market for some time and, in some cases, even going through several price reductions. Usually, these homes were overpriced or had major issues that deterred buyers.
By analyzing the records of withdrawn and expired listings, your agent can determine where those pricing strategies went wrong. That information can help you see the power of getting the price right at the outset.
Your agent will also analyze sold and pending listings. Unlike actives, expired, and withdrawn listings, sold and pending listings can show what prices are attracting buyers and getting offers.
Your agent's comparative market analysis will help you to determine where the market has been, where it is going, and where it's not. To be a successful seller, you'll need this knowledge to know where to set your price.