What is a CMA in Real Estate? A Guide to Comparative Market Analysis

A Comparative Market Analysis (CMA) is a professional report prepared by a real estate agent to determine a home's accurate market value. For sellers, it establishes a competitive listing price. For buyers, it ensures an offer is fair and competitive. Crucially, a CMA is not a formal appraisal but an expert evaluation based on recent sales of similar properties, known as comps. Relying on a CMA helps you avoid the financial risks of overpaying for a home or underpricing your own.

What Exactly is Included in a CMA Report?

A thorough CMA provides detailed data on comparable properties that have recently sold. The most reliable comps are homes sold within the last three to six months in active markets, or up to a year in slower or rural areas. The goal is to find properties that closely match the subject home based on specific criteria.

A professional agent will intentionally exclude certain listings to maintain the analysis's accuracy:

• Active Listings: Homes currently for sale may be mispriced, so their asking price is not a verified indicator of value.
• Pending Listings: Until a sale is finalized, the contract price is often confidential. The public list price of a pending sale is not a reliable data point.
• Expired or Withdrawn Listings: These homes did not sell at their listed price, indicating the market rejected that value, so they are not valid comparisons.

How Do Real Estate Agents Select Comparable Properties?

Agents use a meticulous process to select comps. Consider a scenario where you are buying a three-bedroom, two-bathroom home listed for $230,000. An agent’s CMA would evaluate comps based on these key factors:

• Sold Date: Prioritizing homes sold within the last three to six months ensures the data reflects current market conditions.
• Location: Ideal comps are in the same neighborhood and school district, with similar surroundings, like a quiet cul-de-sac.
• Size: Agents look for a similar number of bedrooms and bathrooms, comparable usable square footage, and equivalent features like a garage or basement.
• Year Built and Condition: Comps should be of a similar age, unless one has undergone significant renovations. The quality of updates and overall condition are critical.
• Taxes and Fees: Properties with similar annual property tax bills and Homeowners Association (HOA) fees provide a more accurate comparison of ongoing ownership costs.

How are Adjustments Made for Non-Identical Comps?

Since no two homes are identical, agents make value adjustments. Using the example home, a CMA might include these three different comps:

• Comp 1: Sold for $235,000. It has one fewer bathroom but is on the same street with similar finishes.
• Comp 2: Sold for $275,000. It has the same bed/bath count but is a newer build with a finished basement adding square footage.
• Comp 3: Sold for $245,000. It is the same size but has not been updated.

The agent analyzes these differences to adjust the value of the subject home up or down. Based on our experience assessment, the home’s value likely falls between $255,000 and $270,000, guiding you toward a competitive offer.

Why is a Professional CMA Better than Finding Comps Online?

While homeowners can research recent sales on public websites, a agent-prepared CMA offers significant advantages:

• Access to Deeper Data: Agents have access to the Multiple Listing Service (MLS), which contains information not always public, such as seller concessions or specific financing terms that influenced the final sale price.
• Local Market Expertise: An agent understands nuances, like which neighborhoods command a premium or how certain features impact value in your specific area.
• Context for Anomalies: If a comp sold for an unusually high or low price, an agent can often contact the listing agent to understand the context, such as a cash buyer closing quickly.

How Can You Get a CMA?

If you are working with a licensed real estate agent, they will typically provide a CMA for any home you are seriously considering buying or when preparing to list your own home. This service is a standard part of their representation. If you are not yet working with an agent, you can find experienced professionals through online agent finder tools that allow you to search by location and read verified reviews.

Is a CMA the same as an appraisal? No. A CMA is an agent’s estimate of value, while an appraisal is a formal valuation conducted by a licensed appraiser that a mortgage lender requires to finalize a loan.

For a preliminary analysis, you can review recently sold homes on real estate portals, focusing on properties similar in size, location, and features. However, this should be considered a starting point before obtaining a professional CMA.

A well-prepared CMA is an indispensable tool for making informed financial decisions in real estate. It provides the data-driven confidence needed to price a home correctly or to make a strong, evidence-based offer.