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.