Comparative Market Analysis

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Comparative Market Analysis

A comparative market analysis (CMA) estimates a home’s likely selling price by comparing it to similar properties (“comps”) that recently sold in the same area. Agents commonly prepare CMAs to help sellers set competitive listing prices and to assist buyers in making informed offers. Buyers and sellers can also create their own CMAs using listing sites or spreadsheets.

Key takeaways

  • A CMA is an estimate of price based on recent comparable sales, not a formal appraisal.
  • It considers location, size, condition, features, and market activity.
  • CMAs are typically prepared by real estate agents but can be performed by anyone.
  • Appraisals require a licensed appraiser and establish an official market value used by lenders.

What a CMA does

A CMA provides a data-driven price range that reflects current market conditions. It helps:
* Sellers avoid underpricing or overpricing their home.
* Buyers determine whether a listing is fairly priced and craft competitive offers.
* Agents and sellers set realistic expectations about time on market and negotiation flexibility.

What goes into a CMA report

While formats vary, a useful CMA typically includes:
* The subject property’s address and detailed description (square footage, beds/baths, lot size, condition, upgrades).
* Three to five comparable properties that sold recently.
* Sales price, sale date, and square footage of each comp.
* Adjustments (dollar amounts) for material differences between the subject property and each comp.
* Adjusted sold price per square foot and an estimated price range for the subject property.

CMA vs. appraisal

  • CMA: Performed by an agent, buyer, or seller. Uses comparable sales to estimate a competitive listing or offer price. Not a licensed valuation.
  • Appraisal: Conducted by a state‑licensed appraiser. Produces an official market value used by lenders to set loan amounts.

Key distinction: price (what a buyer pays) vs. value (an appraiser’s assessed worth).

How to perform a CMA — step by step

  1. Evaluate the neighborhood
  2. Assess overall quality, block-to-block variations, proximity to schools, amenities, nuisances, HOA rules, and curb appeal.
  3. Gather property details
  4. Record accurate size (livable area), lot size, age, condition, layout, finishes, upgrades, and any unique features.
  5. If possible, inspect the property in person.
  6. Select appropriate comps
  7. Choose 3–5 recently sold homes within the same neighborhood or school district—ideally within about one mile.
  8. Match comps by style, square footage, lot size, beds/baths, and placement (e.g., waterfront, golf course).
  9. Prioritize the most recent sales (typically within the last 3–6 months) to reflect current market trends.
  10. Adjust for differences
  11. For each comp, make dollar adjustments to account for superior or inferior features compared with the subject property.
  12. If a comp has a superior feature (e.g., an extra bedroom), deduct an amount from that comp’s price to normalize it with the subject property.
  13. Never adjust the subject property’s price; only adjust comps to create apples‑to‑apples comparisons.
  14. Calculate price per square foot and estimate price
  15. Divide each comp’s adjusted price by its square footage to get adjusted price per square foot.
  16. Average those per‑square‑foot figures, then multiply by the subject property’s square footage to estimate its price.
  17. Produce a reasonable price range
  18. Present a best‑estimate price plus a high and low end to account for market momentum, condition uncertainty, and negotiation room.

Tools: spreadsheet software or CMA tools provided by listing sites and brokerage platforms can streamline calculations and presentation.

Example (brief)

A CMA might show three comps:
* Comp A adjusted sold price: $420,000 — 1,800 sq ft → $233/sq ft
* Comp B adjusted sold price: $390,000 — 1,650 sq ft → $236/sq ft
* Comp C adjusted sold price: $405,000 — 1,700 sq ft → $238/sq ft
Average ≈ $236/sq ft. For a 1,750 sq ft subject property: 1,750 × $236 ≈ $413,000 estimated price.

When to use a CMA vs. an appraisal

  • Use a CMA to set listing prices, evaluate offers, or quickly gauge market positioning.
  • Use an appraisal when a lender requires an official valuation, when the market is thin or atypical (rural, unique properties), or when tax/legal valuation is needed.

Common questions

  • How recent should comps be? Ideally within 3–6 months; in fast markets, the more recent the better.
  • How many comps are needed? Typically 3–5 solid comps provide the best balance of accuracy and simplicity.
  • Can anyone perform a CMA? Yes. Agents usually have better access to sales data and experience with adjustments, but buyers and sellers can create CMAs using public listings and sale records.

Bottom line

A well‑constructed CMA is a practical, market‑based estimate that helps set realistic listing prices and informs buyer offers. The most reliable CMAs use the most similar, recent comps with minimal adjustments and account for neighborhood nuances and current market conditions. When an official valuation is required, or when comparable sales are scarce, obtain a licensed appraisal.