Market Analysis
How to Do a Comparative Market Analysis (CMA)
A CMA (Comparative Market Analysis) is one of the most important skills a real estate agent can develop. Done well, it positions you as a trusted market expert. Done poorly, it costs your clients money and your credibility. Here's the step-by-step methodology used by top producers.
The CMA Process: Step by Step
Step 1: Gather Subject Property Data
Pull the property from tax records and MLS history. Note: size (GLA), lot size, year built, bedroom/bath count, garage, basement, condition, last sale date and price, current improvements. Walk the property if possible — condition matters enormously.
Step 2: Select Comparable Sales
Search for 3–5 closed sales within: same neighborhood/subdivision, last 90 days (180 max), similar size (±15–20%), same property type, similar bedroom/bathroom count. Prioritize proximity, recency, and similarity. Reject comps that are too different — a garage sale skews data.
Step 3: Make Adjustments
For each comp, adjust for differences with the subject property. Add value when the comp is inferior; subtract when superior. Use market-specific adjustment amounts (check appraiser estimates for your market) for: square footage ($50–$150/sq ft), bathrooms ($5K–$15K), garage ($10K–$20K), condition, and features.
Step 4: Analyze Active Competition
Review current active listings as competition the subject will face. Note their list price, days on market, and how they compare to your subject. These are your seller's competition — buyers will compare them. Knowing the competition strengthens your pricing recommendation.
Step 5: Check Expireds
Expired listings show what price points the market rejected. An expiry at $500K tells you buyers weren't willing to pay that much in the neighborhood during that period. This sets an upper bound on your pricing recommendation.
Step 6: Formulate Recommendation
Your adjusted comp sale prices define a range. Factor in current market conditions: if absorption rate is rising (market heating), price at the upper end; if softening, price at the middle. Present a range with your specific recommendation and your reasoning.
CMA FAQ
How long does a CMA take to prepare?
A thorough CMA takes 1–2 hours for most agents. Desktop CMAs (no property visit) take 45–60 minutes. More complex properties in thin markets may require 2–3 hours of research. Agents who do CMAs weekly develop systems (saved MLS searches, templates) that reduce time to 30–45 minutes without sacrificing quality.
What software do agents use to prepare CMAs?
Most CMA software integrates with your MLS: Cloud CMA, Comparative Market Analysis in Matrix or Flexmls, RPR (REALTORS Property Resource — free to NAR members), and kvCORE. Canva can be used for custom presentations. The best CMAs combine data accuracy with professional visual presentation — both matter for seller confidence.
How do I adjust for different square footage between comps and the subject?
Determine a price-per-square-foot adjustment for your market — typically $50–$150/sq ft for living area, depending on price range. If the subject is 1,800 sq ft and the comp is 1,600 sq ft, and your adjustment is $100/sq ft: add $20,000 to the comp sale price. Verify your adjustment by comparing several comp pairs to see what the market actually paid for square footage differences.
What if there are no good comps for a unique property?
Widen your search: expand the geographic radius, extend the time window (up to 6–12 months, applying a time adjustment for market changes), or accept comps with greater differences and apply larger adjustments. For truly unique properties, consider using two approaches: adjusted comparable sales AND the cost approach (land value + replacement cost minus depreciation). Disclose your methodology to the client — honest uncertainty is better than false precision.