Real Estate Valuation
What Is a Comparative Market Analysis (CMA)?
A comparative market analysis (CMA) is an estimate of a property's value prepared by a real estate agent using data on recently sold, currently listed, and expired listings of similar properties in the same market area.
The CMA is the foundation of the listing presentation and the primary tool agents use to advise sellers on pricing. It is NOT a formal appraisal, and that distinction matters significantly on the licensing exam.
CMA Components
Comparable Sales (Comps)
Recently sold properties similar in size, age, condition, location, and features. Sold comps are weighted most heavily because they represent actual market transactions — what buyers actually paid. Typically within the last 3–6 months and within 1 mile.
Active Listings
Current competition: what the subject property will be competing against. Active listings establish the ceiling — buyers compare options. Overpriced listings that sit on the market damage eventual sale prices.
Expired Listings
Properties that didn't sell at their list price. Expired listings reveal what the market rejected. They help identify the price ceiling — any price above which buyers consistently walked away.
Adjustments
Agents adjust comp values for differences: +$5,000 for an extra bathroom, -$8,000 for fewer square feet, +$10,000 for a pool. These adjustments are judgment calls based on market data — not formulas. This is where agent expertise matters most.
CMA vs. Appraisal: Critical Distinction
An appraisal is a formal estimate of value prepared by a licensed or certified appraiser for lending purposes. Appraisers follow USPAP (Uniform Standards of Professional Appraisal Practice) and produce a legally binding document that lenders rely on.
A CMA is an agent's opinion of value — not legally binding, not produced by an appraiser, and not held to USPAP standards. Agents should never call a CMA an 'appraisal' — doing so constitutes misrepresentation and may violate state law.
Exam Key Points: CMA
A CMA is an agent's opinion of value — NOT an appraisal
Agents are not appraisers — calling a CMA an appraisal is misrepresentation
Sold comps are the most reliable indicator of market value
Active listings show competition; expired listings show price rejection points
Adjustments are made for differences between the subject property and comps
The seller sets the list price — the agent advises based on the CMA but cannot force a price
Definition Page Pillars
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