A Comparative Market Analysis (CMA) is an evaluation of a property’s value based on the recent sales prices of similar properties in the same area. Real estate agents often perform CMAs to help buyers and sellers determine a fair market value for a home. Here’s how a typical CMA is conducted:
- Selection of Comparable Properties:
- The agent selects recently sold properties (comparables or “comps”) that are similar to the subject property in terms of location, size, age, features, and other relevant factors.
- Adjustments for Differences:
- Since no two properties are exactly alike, the agent makes adjustments to the sale prices of the comparable properties to account for differences. For example, if the subject property has an extra bedroom compared to a comp, an adjustment might be made to reflect that difference in value.
- Calculation of Adjusted Values:
- The adjusted values of the comparable properties are then used to estimate the potential market value of the subject property.
- Estimation of Market Value:
- The agent considers the adjusted values of the comparable properties and arrives at an estimated market value for the subject property. This value is often presented as a price range.
- Presentation to Clients:
- The agent presents the CMA to the property owner (seller) or potential buyer. This analysis helps clients make informed decisions about setting a listing price, making an offer, or negotiating in a real estate transaction.
A well-prepared CMA takes into account various factors, including the property’s size, location, condition, features, and recent market trends. It provides valuable information to both sellers and buyers, allowing them to make decisions based on current market conditions.
