Market Analysis
What Is a Comparative Market Analysis (CMA)? A Complete Guide
A Comparative Market Analysis (CMA) is a formal evaluation of a property's market value based on recently sold comparable properties. Agents prepare CMAs to help sellers set a list price and buyers make competitive offers. It is the most important analytical tool in a residential real estate agent's toolkit.
How a CMA Works
A CMA identifies 3–5 recently sold homes (comps) that are similar to the subject property in location, size, age, condition, and features. The agent then adjusts the comp sale prices up or down to account for differences — a comp with one fewer bathroom would be adjusted upward; a comp with a pool that the subject property lacks would be adjusted downward.
The adjusted sale prices form a range of value. The list price recommendation falls within this range, adjusted for current market conditions (inventory, competition, days on market trends).
What to Look for in a Comparable Sale
Location: same neighborhood, school district, street type
Sold within 90 days (180 days max in slow markets)
Similar GLA (gross living area): within 15–20%
Same property type: SFR to SFR, condo to condo
Similar bedroom and bathroom count
Similar lot size (for properties where lot matters)
Similar age and construction type
Arm's-length transaction (no family sales, foreclosures, or distressed sales without adjustment)
CMA FAQ
What is the difference between a CMA and an appraisal?
A CMA is produced by a real estate agent for pricing purposes. An appraisal is produced by a licensed appraiser for lending purposes, following strict USPAP standards. Both use comparable sales, but appraisals are legally defensible opinions of value while CMAs are informal market analyses. Lenders require appraisals; CMAs are used for listing and offer strategy.
How many comps do you need for a reliable CMA?
Three to five is the standard. Fewer than three provides insufficient data. More than five can confuse the analysis unless they're very similar. In unique or rural properties, you may need to widen the search area or go back further in time — but always note the limitations.
How do you adjust for differences between comps and the subject?
Add value to a comp that is inferior to the subject (the comp sold for less partly because it lacked something the subject has). Subtract value from a comp that is superior to the subject. Common adjustments: bedrooms ($5,000–$15,000), bathrooms ($5,000–$10,000), garage bays ($10,000–$20,000), finished basement (varies widely by market).
Can a CMA be done on a home before the agent sees it?
A preliminary CMA (or 'desktop CMA') can be done using public records and MLS data. But the final CMA should always incorporate an in-person assessment of condition, updates, and features that don't show in public records. A home's condition can justify a 10–20% premium or discount versus identical comps.
Related Resources
Definition Page Pillars
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