What is a Comparative Market Analysis (CMA)?
A Comparative Market Analysis is prepared by a Real Estate Agent to determine the fair market value of a property, or the price at which the property would be transferred between a willing buyer and willing seller. To determine the price, real estate agents use comparable properties.

What are Comparable Properties, or “Comps?”
Comparable properties are properties located in the immediate area that are similar, though not necessarily identical, to the subject property (the property for which the fair market value is being determined). They include properties that have recently sold (ideally within the last 6 months), recently expired (again ideally within the last 6 months), and properties that are currently for sale. Comps are used as benchmarks in objectively evaluating fair market value for the subject property.

Why are Comparable Properties Important?
They illustrate what buyers have been willing to pay for properties that are similar to the subject property. And, they also illustrate what buyers aren’t willing to pay for similar properties. Knowing this range helps to competitively position the pricing.

What are the steps in a CMA?
1. Research the Subject Property - Factors to consider when looking at the subject property include the general condition of the property, additions, upgrades, amenities, age, location, square footage, number of bedrooms and bathrooms, and type of home. Often times a visit to the property is necessary to get the most accurate information.
2. Select the Comps - Using the factors listed above, the 5 most similar properties that have recently sold, recently expired, or are under contract are identified.
3. Adjust for Differences - This is how real estate agents objectively price a property. If the subject property has 3 bedrooms and a comparable only has 2, then the price needs to adjust accordingly for the difference. This example also illustrates why it is so important to find properties with as many similarities to the subject property as possible.
5. Calculate an Estimated Price Range - Once all of the adjustments are made, a price range can be determined. Why a price range? Because a price range gives a conservative, moderate, and aggressive market value for the subject property, all of which can be appropriate pricing strategies.

CMA vs Appraisal
A CMA is not an appraisal. CMA’s are performed by real estate agents to establish the price of a particular property. An appraisal is performed by a licensed appraiser to determine the value of a particular property. Lenders use the appraised value to determine if the property is worth the amount of the loan the potential buyer is seeking. To put it simply, price is what you pay for something while value is what it is worth.

Do you need a CMA?
CMA’s are useful to both buyers and sellers. It can tell prospective buyers whether or not an asking price on a property is too high, too low, or a fair price. On the other hand, it helps sellers determine a fair listing price, which ensures the highest amount of exposure to potential buyers. But to get the most accurate CMA requires access to complete sales data and knowledge of local and national markets, which is where I come in. I’m happy to provide you with a CMA regardless of whether you’re a buyer, seller, or just curious about the fair market value of your home.

What is a Comparative Market Analysis (CMA)? - Jennifer Mencl - EXI...