| Comparable | Sale price | Adjustment | Adjusted value |
|---|---|---|---|
| Comp A (extra bath) | $420,000 | -$10,000 | $410,000 |
| Comp B (similar) | $400,000 | $0 | $400,000 |
| Comp C (larger lot) | $410,000 | -$5,000 | $405,000 |
| Indicated range | $400,000-$410,000 |
Glossary · Pricing & valuation
Comparative Market Analysis (CMA)
A comparative market analysis (CMA) is a report a real-estate agent prepares to estimate what a home should sell for or what a buyer should offer. It compares the property to recently sold, active, and pending homes that are similar in location, size, age, condition, and features, then adjusts for the differences. A CMA guides pricing but is not a certified appraisal.
Also known as: CMA
How is a CMA done?
An agent selects three to six recently sold comparable homes near the subject property, then adjusts each sale price up or down for differences in size, condition, upgrades, and location. Active and pending listings add context on current competition. The adjusted values point to a suggested price range.
The agent starts by pulling recent MLS sales within a tight radius, usually within the past three to six months. Close matches in bedrooms, bathrooms, square footage, and age make the strongest comparables.
Each comparable gets adjusted for features the subject lacks or adds. A comp with an extra bathroom, for example, is marked down to reflect that difference. The adjusted prices then frame a realistic range.
Why does a CMA matter to buyers and sellers?
A CMA anchors pricing to real market evidence instead of emotion or guesswork. Sellers use it to set a competitive list price and avoid sitting on the market. Buyers use it to frame an offer that is strong but not overpaying. Both sides negotiate from data.
For sellers, a well-built CMA supports a price that attracts activity while protecting equity. Overpricing risks a stale listing; underpricing leaves money on the table.
For buyers, a CMA reveals whether a list price is fair. In competitive markets it also shows how much room exists to bid up without straying far from recent sales.
What is the difference between a CMA and an appraisal?
A CMA is an agent's informal pricing opinion with no legal weight; an appraisal is a licensed appraiser's formal valuation that lenders rely on to approve a mortgage. Appraisals follow regulated standards and carry a fee. CMAs are usually free and built to guide listing or offer strategy.
Lenders do not accept a CMA in place of an appraisal because a CMA is not independent or certified. The agent preparing it often has a stake in the transaction.
Both tools rely on comparable sales, so their conclusions frequently land close together. The key difference is authority, method, and who orders the report.
Worked example. For example, suppose a three-bedroom home is being priced. The agent finds three recent nearby sales at 400,000, 420,000, and 410,000 dollars. One comp had an extra bathroom, so the agent subtracts 10,000 to match the subject. After adjustments, the comps cluster near 405,000, suggesting a list price in that range.
Common mistakes with Comparative Market Analysis
- Treating a CMA as a certified appraisal that a lender will accept for a mortgage.
- Choosing comparables that are too far away, too old, or too different in size to be reliable.
- Ignoring condition and upgrades, which can move a fair price by tens of thousands of dollars.
- Cherry-picking only the highest sales to justify an inflated list price.
- Relying on a single comp instead of several sales that confirm a consistent range.
Related terms
Term
List Price
The price at which a property is publicly advertised for sale by the seller.
Define TermAppraisal
A licensed appraiser's independent, professional opinion of a property's market value.
Define TermAbsorption Rate
The rate at which available homes sell in a market during a given period, often expressed
Define TermFair Market Value
The price a willing buyer and willing seller would agree on, both informed and neither und
DefineComparative Market Analysis FAQ
Is a CMA free?
Most agents provide a CMA at no charge, usually while competing for a listing or helping a buyer craft an offer. It is a marketing and advisory tool, not a paid service. A formal appraisal, by contrast, carries a fee typically in the hundreds of dollars.
How many comparable sales does a good CMA use?
A solid CMA usually relies on three to six recently sold homes, supported by active and pending listings for context. Enough comps confirm a consistent range, while too few can skew the estimate. Quality of the matches matters more than sheer quantity.
Can I do my own CMA as a buyer?
You can build a rough version using public sold data and listing sites, but you will lack full MLS access and professional adjustment judgment. Agents see complete sale terms and condition notes. A do-it-yourself estimate is a useful starting point, not a replacement for expertise.
How recent should CMA comparables be?
Most agents favor sales closed within the past three to six months, since older data may miss recent market shifts. In fast-moving markets, even ninety-day-old sales can lag. Fresh comparables reflect current buyer demand and give the most accurate price range.
Does a high CMA guarantee my home sells for that price?
No. A CMA estimates a likely range based on similar sales, but buyers ultimately set the sale price through offers. Condition, timing, marketing, and competition all influence the outcome. Treat the CMA as informed guidance, not a promise of the final number.
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