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There’s no substitute for the kind of useful information a CMA can bring. It includes active listings for comparable homes in your area, and their locations. It also features such important details as square footage, lot size, date built, the number of bedrooms and baths, amenities, updates and more. This kind of information ensures that you’re comparing “apples to apples.” A CMA lists pending sales and houses sold in your area in the past six months, along with their actual sale prices.

By comparing your home to similar homes in your neighborhood and reviewing their list prices as well as their actual selling prices, I can help you arrive at a fact-based assessment of your home’s market price.

When you base your pricing strategy on the market conditions at the time you put your home up for sale, you have a better chance of selling it quickly. Price your home appropriately from the outset and you can maximize the chances of reaching the most qualified buyers. The fact is, a home receives its best exposure during the first three to five weeks on the market. Multiple listing service statistics confirm that the more time a home spends on the market, the more its price drops.

As a recent National Association of Realtors study shows in the chart below, the longer a home is on the market, the greater the difference between the original listing price and the actual sale price. For homes on the market less than one week, the median price was 100 percent of the listing price; 58 percent of homes sold at the listing price. For homes that were on the market 17 weeks or more, the median sales price was 90 percent of the listing price, and only 4 percent sold at listing price.

Not only does the difference between list price and selling price grow the longer a house remains on the market, so does the number of times the price is reduced. Overall, 40 percent of sellers noted that they did not reduce their asking price, while 26 percent reduced it once. For homes on the market two weeks or less, 78 percent did not reduce the asking price. For homes on the market 17 weeks or more, 26 percent reduced the price twice.

For most people, their home is the single most valuable investment they have. You don’t want to price your home too low, but it’s essential that you get the best possible price. Remember that prospective buyers who look at your listing are looking at other listings similar to yours. You want to make sure that your price isn’t so high that they cross your house off the list.

It’s important to understand that agents are reluctant to show an overpriced home, since their clients depend on them to find them the best possible value in a house. If your house is overpriced, an agent will know it and the only reason they’ll have for showing it is to make a competing property look like a better value.

Although a CMA can offer you a great deal of important data, my localized knowledge of your neighborhood can prove invaluable. For example, I am likely to be aware of coming changes, such as plans for a new library or park in your area, that can directly affect the value of your home. In the end, pricing your property is both an art and a science. As an agent, I have the experience to offer both.

A comparative market analysis (CMA) is an invaluable tool for home sellers who want to price their home appropriately. A CMA typically includes the following:

Homes that are currently on the market. They’re your competition. Remember that the asking prices for these homes may not be realistic, especially in a buyer’s market.

These homes are under contract but have not yet closed. Typically the sale price won’t be available until the sale is completed, but you can see where the market is going by analyzing which homes seem to be selling and what their asking prices are.

Homes that have closed within the past six months. These are the sales an appraiser uses when appraising a home for a buyer, along with pending sales. By looking closely at sold listings that are comparable to your home, you can start to determine your home’s market value.

Properties that were taken off the market for a variety of reasons, but usually because the asking price was too high.

Again, these properties were typically priced too high. Sometimes they appear again as active listings, listed by a new agent at a lower price. Listings also expire because they weren’t marketed aggressively enough or because they needed repairs.

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The Dangers of Overpricing Your Home

Like any seller, you want to receive the highest possible price for your home. Obviously you don’t want to ask for too little, but you can also lose money—and time—by pricing your property too high.

The problem with testing the market

Some sellers set a high price, assuming they can always reduce it. This isn’t a good strategy because the best buyers for any property will typically see it in the first few weeks. If a property doesn’t look like a good value, chances are they won’t be back.

Often sellers who decide on an unrealistically high price miss out on a perfectly good offer because they think it’s too low.

For example, a seller who was asking $600,000 for his house turned down an offer of $450,000. A year and a half later, he accepted an offer for $395,000.

The hidden costs of overpricing your home

While an overpriced house stays on the market, sellers continue to pay the mortgage, taxes and maintenance costs. Moreover, they can’t proceed with their future plans, such as purchasing a new home, moving, consolidating households, liquidating an estate or finalizing a divorce. In the end, the most successful outcome begins with an objective assessment of a home’s value and a price consistent with the market.