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A Comparative Market Analysis (CMA) is the prinicple way home's Market Value is determined. Market Value is very simply the price a Ready, Willing and Able buyer is willing to pay to purchase your home. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and help buyers make competitive offers. 


  • A comparative market analysis (CMA) uses objective data to provide an estimate of a home's price to help sellers set listing prices and help buyers make competitive offers. Your Realtor will sit down and walk you through the various items that contribute to the CMA.

  • The analysis considers numerous factors such as location, size, construction, style, age, overall condition, and other factors such as upgrades and basic amenities of the property and comparables. Many experienced Realtors will use their experience to 'fine tune' the CMA noting how the home will likely show, t 

  • Buyer and seller interested in a CMA for a specific property should ask a local real estate agent or broker for help. Doing your own work online is not likely to yield the results that an experienced and knowledgeable Realtor can provide - the added touch that separates the amateurs from the pros.

Understanding Comparative Market Analysis

A comparative market analysis provides sellers a sound, independent and objective basis to work with their Realtor to select the best listing price for their homes. The "best" price is one that's not so low it makes buyers suspicious that something maybe wrong with the home or so high the home won't sell and sits on the market. Buyers can use a CMA to verify that a home is in the right price range and help identify a competitive offer that will be taken seriously—without going to high. 

A CMA compares a property to other homes similar in location, size, and features. Ideally, a CMA uses recently sold homes from the same subdivision. Of course, finding homes that sold within the last three to six months in the immediate area. 

A comparative market analysis is a an estimate of the Market Value of the property, or what the property should realistically sell for in the current market. The CMA is the principle piece of pricing information. 


When a Realtor conducts a comparative market analysis, they will create a report detailing the findings. There's no standardized CMA report; however, although some states have statutes that require specific information be included in CMAs, Texas is not one of those so it is up to your Realtor to determine the level of detail they put in the CMA. Certainly, the more information the more time and effort placed in developing the CMA.

That said, it is generally accepted that a CMA includes:

  • The address of the property and a minimum of three to five comparables properties in the following three categories: Sold, Pending and Active

  • A basic description of each property, including number of levels, floor plan, and the number of bedrooms and bathrooms

  • The square footage of each property, garage vs carport, attached or detached

  • The sales price of each comp

  • Dollar adjustments for any differences and a brief justification

  • The adjusted sold price per square foot of each comp

  • A reasonable price range for the property


A CMA is completed by a Realtor agent for the seller or the buyer using comparable homes to estimate a price. This provides pricing information to the Realtor to develop the pricing strategy including justification for the initial listing price and detailed marketing strategy including the all important target market - those buyers in the category to purchase a home in the location, with amenities at the listing price.

An appraisal is quite different in practice and requires a state-licensed and certified appraiser. The appraiser compares homes similar in size, layout, and location. Then, they evaluate housing market conditions and generate a report with the home's market value. The appraisal value is used by lenders to establish the amount a buyer is approved for.


One Caveat for sellers is that if you decide to have an appraisal of your home in lieu of a CMA you may, depending on how old the appraisal is, provide that to a potential buyer. This greatly hinders your Realtor in negotiating price with a buyer or buyer's agent.

KEY DEFINITION: The main difference between an appraisal and a CMA is that the CMA establishes a home's price, whereas an appraisal establishes its value—price is what you pay, value is what it is worth.


Doing a CMA involves much more than just comparing the prices of recently sold homes in the area. Recall that we are going to be comparing a MINIMUM of three to five comparable properties in three categories: SOLD, PENDING, ACTIVE LISTING. Also, remember that as with any analysis, whether on the computer or not, the old adage of 'garbage in = garbage out applies! Here's a rundown of the basic steps for creating an accurate CMA:

1. Evaluating the Neighborhood
To set the right listing price—or ensure a home you're interested in is a good deal—the CMA should consider the neighborhood's general quality, overall condition of homes, proximity to noisy transportation like a railroad or major highway, crime statistics for the area are often a requested feature. Also, the CMA should consider the more attractive blocks and address community amenities, nuisances, and HOA rules. Equally important for inclusion are school proximity and curb appeal which is highly subjective but also is crucial to whether buyers stop and go in to look or stop and go on.

2. Gathering Details About the Property
If a Realtor is doing the CMA for a buyer, they will review the existing listing and make an in-person visit to gather information about the home. They'll take note of the home's size (particularly the liveable space), age, style, construction, condition, layout, finishes, landscaping, upgrades, and updates. 

3. Selecting the "RIGHT" Comps
Find three to five comparable homes in the area and in the three categories as close in proximity to the home as possible. Ideally, the comps will be within one mile of the property AND in the same school district. The focus should be on similar houses in terms of square footage, lot size, bedrooms, bathrooms, age, amenities (including recent upgrades) and type of construction.

The RIGHT Comps also mean that if the home has a something unique such as a lake view or lake access, golf course view or backs up to a golf course, has a well designed pool vs a hole with water in it make sure the 'comps' arre COMPARABLE. All these features are benefits and what sells the home will not be the 80% that everybody has but the 20% that only a few have. These are distinguishing benefits that should not be overlooked.

4. Adjust for Differences
The next step is to adjust for differences between the home and the other comparable properties. This is where the experienced Realtor shows their worth, by assigning a price to each of the differences and adjusting the price of each comp accordingly. It may seem counter-intuitive, but if the comp has an inferior feature, a positive adjustment is made to the price of the comp, and vice versa.


For example, if a comp has an extra bedroom (considered a beneficial feature), it is reasonable to assume that the buyer paid more to get the extra bedroom. In this case, if this property was among the comps needed for a complete CMA you would deduct an amount from the comp to account for the extra bedroom, thereby allowing an apples-to-apples comparison. Therefore, the price of the target home is never adjusted.

5. Determine the Price Per Square Foot After Adjustments
After adjusting for differences, divide the adjusted price of each comp by its square footage to determine the sold price per square foot. Next, add the sold price per square foot of all the comps, and divide by the number of comps to get the average. Finally, multiply this average by the square feet of the property to estimate its price.


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 is an example of a CMA report.


Is a CMA as Good as an Appraisal?

A comparative market analysis can reveal a property's fair price range; however, it is not considered by lenders or real estate experts to be as good or accurate a method as an appraisal by a licensed and certified appraiser.

What Does a CMA Include?

A CMA generally compares a home's location, size, age, style, materials, and condition against similar homes sold within the last six months to arrive at an estimated price.

What Is the Purpose of a CMA?

A CMA allows sellers to establish a fair asking price; it lets buyers see if the seller is asking a reasonable price for the home.

What Is the Biggest Difference Between a CMA and an Appraisal?

A comparative market analysis can be done by agents, brokers, buyers, or sellers. An appraisal can only be done by a licensed and state-certified appraiser.


Generally speaking, the best comps will be the ones that are the most similar to the home, most recently sold, with the fewest adjustments required. This often happens in a subdivision in which the builder of developer had five or six models and they're all alike, possible mirror floorplan, but otherwise built about the same time similar amentities and most easy to comp.


Depending on the market, the final price might need to be tweaked slightly. Some of the things I discuss about my marketing and pricing strategy are in a hot market is hot or low inventory, the price might need to be tweaked up slightly higher. Conversely, if there are many similar homes on the market, the price might have to come down to be competitive.

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