How Your List Price Is Set: Inside a Comparative Market Analysis

Your list price is one of the biggest decisions you make when you sell. Set it well and you give your home the best chance to attract the right buyers; set it too high and buyers may pass it by. Here is how a suggested list price is worked out, and what goes into the numbers.

The short version

What a comparative market analysis is

A comparative market analysis, or CMA, compares your home with similar homes that have sold recently and with similar homes for sale now. The BC Financial Services Authority (BCFSA) notes that your licensee will use market research, along with their knowledge and expertise, to help you set the best listing price.

Greater Vancouver REALTORS® describes the same approach: reviewing recent sales and current listings of similar homes, looking at the inside and outside of your home, its style, renovations, views, landscaping and zoning, and weighing economic conditions and the BC Assessment figure.

Recent sales come first

Recent sales are the core of the analysis because they show what buyers actually paid. The best comparables are close by, similar in type, size, age and lot, and as recent as possible, since prices can move in a few months. In a strata, sales in the same building or complex are often the most useful of all.

Know your competition

Buyers will compare your home with everything else on the market in their price range. Active listings show what you are up against today, and homes that were listed but didn't sell can show where buyers drew the line.

Adjusting for differences

No two homes are identical, so the comparison has to account for what sets yours apart:

• Size and layout. Finished floor area, bedrooms, bathrooms and how well the space works.
• Condition and updates. A renovated kitchen, a newer roof or windows, or work that still needs doing.
• Lot and setting. Lot size and shape, orientation, privacy, views and the street itself.
• Extras. Parking, storage, a legal suite or a workshop.
• For strata homes. Strata fees, the age and condition of the building, and what the depreciation report says is coming.

Market trends and the MLS® Home Price Index

Greater Vancouver REALTORS®, formerly the Real Estate Board of Greater Vancouver, covers Coquitlam, Port Coquitlam and Port Moody. The Fraser Valley Real Estate Board covers areas including Surrey and Langley. Both report market trends using the MLS® Home Price Index, which tracks the price of a typical benchmark home for each area and property type. It is useful for seeing which way prices are moving, but your home isn't the benchmark home, so the index can't price it on its own.

Your assessment is not your price

BC Assessment values reflect market value as of July 1 of the year before, and your home's physical condition as of October 31. By the time you list, your assessment may be more than a year behind the market, and it can't account for everything that makes your home different. I explain more in BC Assessment vs market value.

Appraisals are different

An appraisal is a formal valuation by a designated appraiser, such as an AACI or a Canadian Residential Appraiser (CRA) from the Appraisal Institute of Canada. A buyer's lender often orders one before approving a mortgage, and the lender is the appraiser's client even if the buyer pays the fee. If an appraisal comes in below the agreed price, the buyer may need to put more money down or renegotiate, so a well-supported price helps you too.

Setting the price

Buyers search online in price ranges, so where your price sits within those ranges affects who sees your home. A price set well above the market can mean fewer showings and a longer wait for offers. Your REALTOR® must act in your best interest, follow your lawful instructions and disclose all known material information, and the final price is your decision. BCFSA also reminds sellers that they are never required to accept an offer, even one at full asking price.

Questions sellers often ask me

What is a comparative market analysis?

It compares your home with similar homes that sold recently and with similar homes for sale now, adjusting for the differences, to help you choose a list price.

Should I list my home at its BC Assessment value?

Not necessarily. Your assessment reflects market value as of July 1 of the previous year, so it may be well behind the current market, and it can't account for everything that makes your home different.

What is the MLS® Home Price Index?

It measures the price of a typical benchmark home for each area and property type. Greater Vancouver REALTORS® and the Fraser Valley Real Estate Board use it to report market trends.

Is a comparative market analysis the same as an appraisal?

No. A comparative market analysis is prepared by your REALTOR® to help set a list price. An appraisal is a formal valuation by a designated appraiser, often ordered by a buyer's lender.

Who decides the list price?

You do. Your REALTOR® recommends a price based on the market, and you make the final decision.

Getting ready to list? Read my seller's checklist and the BC selling process from listing to completion, or request a free home evaluation.

This article is general information. For BCFSA's guide for sellers, see listing your home.