A Comparative Market Analysis (CMA) is a comprehensive report that real estate agents provide to help sellers determine the appropriate listing price for their property.

It’s also sometimes used by buyers to assess the fair market value of a property they’re interested in.

A CMA compares the subject property to similar properties (comps) that have recently sold or are currently on the market in the same area.

Here’s how a CMA typically works:

  1. Property Details:

   – The real estate agent collects detailed information about the subject property, including its size, features, condition, and any unique attributes.

  1. Comparable Properties:

   – The agent selects recently sold properties and currently listed properties that are similar to the subject property in terms of location, size, condition, and features.

  1. Comparing Features:

   – The agent compares the features of the comparable properties to the subject property. This includes factors like the number of bedrooms and bathrooms, square footage, lot size, and amenities.

  1. Adjustments:

   – If the comparable properties have features that differ from the subject property, the agent makes adjustments to account for these differences. For example, if a comp has an extra bedroom, the agent might adjust its price downward to reflect what the property would have sold for with the same number of bedrooms as the subject property.

  1. Market Conditions:

   – The agent takes into account the current real estate market conditions, including supply and demand, interest rates, and economic factors that might affect property values.

  1. Price Recommendation:

   – Based on the analysis of comparable properties, adjustments, and market conditions, the agent recommends a listing price for the subject property. This price aims to be competitive in the market while reflecting the property’s value.

Conclusion

A well-prepared CMA helps sellers avoid overpricing or underpricing their property. Overpricing can lead to longer time on the market and missed opportunities, while underpricing could result in leaving money on the table. Buyers can also benefit from CMAs when determining a reasonable offer to make on a property.

It’s important to note that while a CMA provides valuable insights, it’s not an official appraisal. An appraisal is typically performed by a licensed appraiser and is a more detailed assessment of a property’s value, often required for mortgage purposes.