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A comparative market analysis (CMA) is an estimate of a home’s value based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and, less commonly, to help buyers make competitive offers.
Understanding Comparative Market Analysis
A comparative market analysis helps sellers choose the best listing prices for their homes. The “best” price is the one that’s not so low it leaves money on the table, and not so high that the home doesn’t sell at all. For buyers, a CMA can verify if a home is a good deal and help pinpoint a competitive offer that will be taken seriously—without going overboard.
A CMA compares a subject property to other homes that are similar in location, size, and features. Ideally, a CMA uses recently sold homes from the same subdivision as the subject property. Of course, finding homes that sold within the last three to six months in the immediate area can be difficult if you’re in a cool real estate market or a rural setting. In these cases, a formal appraisal might be a better option.
Note that while a comparative market analysis is like an informal appraisal, real estate agents and brokers don’t need an appraiser’s license to perform a CMA while serving buyers and sellers. Still, some states will hold real estate agents and brokers responsible if they don’t perform a CMA in a competent manner. If this happens, the state’s real estate licensing commission could take disciplinary action against the agent or broker.
What's in a CMA report?
When a real estate agent or broker conducts a comparative market analysis, they will create a report that details the findings. While there’s no standardized CMA report, it will typically include:
- The address of the subject property and three to five comparables
- A description of each property, including elevation, floor plan, and the number of bedrooms and bathrooms
- The square footage of each property
- The sales price of each comp
- Dollar adjustments for any differences
- The adjusted sold price per square foot of each comp
- The fair market value of the subject property
Many real estate agents and brokers use software to generate comprehensive (and professional looking) CMA reports. If you plan to create your own, use a spreadsheet to keep track of your research or try an online home-price tool offered by one of the real estate listing websites. Below: a sample report.