What is a Comparative Market Analysis in Real Estate?

Disclaimer: PropStream doesn't offer financial advice. This article is for informational purposes only.

In real estate, success hinges on setting the right price—whether you’re helping a seller list their home or advising a buyer on a fair offer.

This is where a Comparative Market Analysis (CMA) comes in. A CMA is a detailed evaluation of a property’s value based on the sale prices of similar properties in the same area (or within about a half-mile radius). It’s a critical tool for real estate agents, offering data-backed insights that guide informed decisions.

Let's dive deeper into what CMAs are and how you can use them for professional growth.

What is a Comparative Market Analysis?

A CMA compares a property to recently sold homes with similar characteristics, known as comparables or "comps." Factors like location, size, age, condition, and features are analyzed to determine an estimated market value.

While a CMA can’t replace a formal appraisal, a CMA provides a reliable snapshot of what a property is likely to sell for in the current market.

Steps to Conduct a CMA

To perform an accurate CMA, follow these steps:

1. Gather Property Details: Collect essential information about the property, including the home’s square footage, number of bedrooms and bathrooms, lot size, condition, year built, school district, historical trends, and any upgrades.
2. Define the Search Area: Focus on the property’s neighborhood or a specific radius to ensure location-based accuracy.
3. Find Comparable Properties: Identify recently sold homes (ideally within the last 3-6 months) that closely match the property’s features.
4. Adjust for Differences: To refine the estimated value, account for discrepancies, such as a larger lot size or a recently renovated kitchen.
5. Analyze the Market Trends: Look at average days on market, price trends, and the state of the local market (buyer’s vs. seller’s).
6. Calculate the Estimated Value: Use the adjusted sale prices of comps to determine a fair range for the property’s value.

Why is a CMA Beneficial?

A CMA offers several advantages:

• For Sellers: It helps establish a competitive listing price, ensuring the home isn’t overpriced (which can lead to it sitting on the market too long and expiring) or undervalued (resulting in missed profits).
• For Buyers: It provides confidence that their offer aligns with market value, avoiding overpayment.
• For Agents: It showcases your expertise and builds client trust, positioning you as a knowledgeable market expert.

How PropStream Makes CMAs Easier and More Efficient

PropStream is a powerful real estate tool that simplifies and enhances the CMA process. With its extensive property data (now offering AI-powered PropStream Intelligence™ data on relevant properties) and analytics, you can:

• Quickly Access Comps: Pull detailed information on recent sales, rentals, and property history in seconds.
• Filter and Adjust: Use advanced filters to find the most relevant comps and refine results for greater accuracy.
• Analyze Market Trends: Access neighborhood insights, price trends, and foreclosure data for a comprehensive market view.
• Save Time: Automate many steps in conducting a CMA, allowing you to focus on building client relationships.