What is a comparative market analysis?
A comparative market analysis (CMA) report gives an estimate of a home's value by comparing the recent sale prices of similar properties nearby.
The analysis considers factors like the properties' location, square footage, features, lot size, number of bedrooms and bathrooms, age, and condition.
Real estate agents use CMA reports to help sellers set a fair listing price for their home and to help buyers make a competitive offer.
While you can complete your own CMA, an experienced realtor can provide the most accurate numbers (and do it for free).
Keep reading to learn more about how to get a free CMA, how agents determine your home's value, and how to do a CMA yourself.
Who should get a comparative market analysis?
Home sellers: CMAs can help you price your home competitively and give you a better idea of your potential net proceeds in a sale. A detailed report provides useful local market information to help set your listing price and create a marketing strategy, including:
- Recent sale prices of similar or "comparable" homes in your neighborhood or subdivision
- How long it takes for similar homes to sell after going live
- What homes sell for compared to their asking prices
- How much value a home's upgrades or renovations add
- A summary of the features of each sold home, including square footage, bedrooms and bathrooms, and acreage
Match with top-rated agents from brand-name brokerages, like Keller Williams and RE/MAX, and request a free CMA today! Sellers will save thousands in realtor commissions with pre-negotiated 1.5% listing fees.
Clever's service is 100% free with zero obligation. Interview as many agents as you like until you find the perfect fit — or walk away at any time.
Home buyers: Learning a home's estimated market value can help you submit a more competitive offer, protect you from offering too much (or too little) on a home, and stay within your spending budget.
Investors: Profiting on a house flip or rental property is all about getting your numbers right, making a CMA report a powerful tool for investors. CMAs can help you evaluate undervalued properties, protect against making a poor investment, and put you in a stronger negotiating position with sellers.
Refinancers: CMAs help homeowners determine if their home's value is high enough to refinance the mortgage. Lenders typically require homeowners to have at least 20% home equity to qualify for a refinance, so a CMA can help you determine if you meet that requirement.
How to do a CMA on your home
Here's how to do a CMA without an agent. This is a basic approach that uses sales data from the home-buying website Zillow.
Step 1: Find homes in your area that have sold recently
- Type your city in the Zillow search bar.
- Check the box for "sold homes" to view only closed sales.
- Choose a sale price range that's within what your home is likely worth.
- Select a minimum bedroom and bathroom number that's at least equal to your home.
- Choose your home type (single-family house, townhouse/condo, or multi-family).
- Add a range of square footage within about 500 square feet of your home.
- Under the "sold in last" tab, select homes that have sold within the past six months.
Fill in the information on each Zillow tab, from left to right, to narrow down sold homes in your area.
On the search bar, type in your city, and then on the next tab, check the box for "sold homes" to view only closed sales.
Choose a sale price range that is within what your home is likely worth (using an online home value estimate is okay). For example, if Zillow estimates your home is worth $550,000, you can choose a range of $500,000 to $600,000.
On the next tab to the right, select a minimum bedroom and bathroom amount that's at least equal to your home (don't select "use exact match," which will limit the amount of results).
Choose your home type (single-family house, townhouse/condo, or multi-family) and then hit done.
Select the "more" tab and add a range of square footage that's within 500 square feet or so of your home. For example, if your home has 2,500 square feet, you can choose a range of 2,000 to 3,000.
Scroll down to the bottom, and select the "sold in last" tab. Select homes that have sold within the past six months.
Hit done, and zoom in on the map to view all sold homes in your area.
Step 2: Choose three comparable sales
From this list of homes, pick three that are most similar to your home and have sold most recently.
Use these factors to pick the best comparable sales:
- Location: Comparable properties should be located in the same neighborhood or subdivision as the subject property (and no more than a mile away).
- Date of sale: Homes sold within the past three months are ideal comps, and the sooner the closing, the better, given how fast the market can change.
- Size: Agents typically try to stay within 500 square feet of the subject home's square footage.
- Condition: A home and its comparables should have similar interior and exterior upgrades, and be in the same condition. You can browse online photos to see a home's condition and upgrades.
- Age of home: The closer in age, the better, as the market tends to value new and old homes differently.
- Type of home: A brick, ranch-style home isn't a good comparable for a two-story townhouse or condo, for example.
Step 3: Use averages to estimate your home's value
Two ways you can estimate your home's value are by using the average sale price and the average price per square foot of the comparable properties.
Average sale price
Let's say your search returns three solid comps that recently sold for $517,000, $544,000, and $555,000 in your neighborhood.
Based on the average sale price of the three comps, your home's fair market value is $538,667.
| Property | Sale price |
|---|---|
| Comp 1 | $517,000 |
| Comp 2 | $544,000 |
| Comp 3 | $555,000 |
| Your home's estimated value | $538,667 |
Average price per square foot
To get an estimated value, you'll need to divide each home's sales price by its interior square footage.
The average sales price per square foot for the three comps is $202. If your home is 2,500 square feet, it has an estimated value of $505,000.
| Property | Sale price | Square feet | Price per sq. ft. |
|---|---|---|---|
| Comp 1 | $517,000 | 2,553 | $203 |
| Comp 2 | $544,000 | 2,643 | $206 |
| Comp 3 | $555,000 | 2,800 | $198 |
| Your home's estimated value | $505,000 | 2,500 | $202 |
Your CMA won't be as accurate as an experienced agent's. Agents have access to more data and have more local market knowledge. They know in depth what factors affect a home's value and by how much. If you want to set a competitive listing price, we recommend you get a free CMA from a top local agent.
Comparative market analysis: Example from an agent
This is an example of a real comparative market analysis that I completed for a home in Charleston County, South Carolina. CMA reports may look different in other markets or states, but they all include the same basic information.
The first two pages of a CMA report include photos and information about the subject property. The third page (image above) provides details on the subject property (second column), along with three comparable sales in the area. Additional pages contain more in-depth information.
Here's the process I followed to complete the CMA:
- Chose three comparable sales. The three comps I chose for this CMA closed within the past four months, sold in the same subdivision, and have a similar size, condition, and features to the subject property.
- Gathered information about each property. This included the distance from the subject property (in miles), list price, sold price, and date of sale.
- Adjusted the sales price of the comps for differences in square footage, bedrooms, and bathrooms. Adjustment amounts were determined using a recent appraisal report on a similar home in the local market.
- Bedrooms: The subject home has one more bedroom than the second comparable, and each bedroom is equal to $2,500 in value in its market.
- Total bathrooms: The subject home has a half bathroom more than all three comparables, adding $2,500 in value to its adjusted price.
- Square footage: The home has more square footage than each comparable. One square foot is equal to $40 in value in its market, adding between $14,880 to $28,600 in value to its adjusted price.
- Averaged the adjusted comp values. The estimated fair market value for this subject property was $528,773 based on the average.
To create a more in-depth CMA, the agent can choose to make more value adjustments, such as acreage, the type of garage, and interior and exterior upgrades.
How accurate is a CMA report?
A CMA from an experienced agent is one of the most accurate ways to value your home.
Consider these factors when choosing which agent will run the numbers for you:
- Experience: A seasoned, full-time agent will likely create a more accurate CMA compared to a new or part-time agent, as they are more committed to their profession and have years of experience.
- Local knowledge: A local realtor will know the best comparables to choose, which sales to disregard, and how to properly adjust home values.
- Attention to detail: Agents who fact-check MLS information against a property's tax records get the most accurate source of information for square footage, bedrooms, and bathrooms.
Note that CMAs are only as accurate as the most recent sales data. It's impossible to value a home accurately if no homes in your area have sold recently.
CMA vs. home value estimator
Generally, CMAs are much more accurate than free online home value estimators. Estimators can give you a ballpark idea of what your home is worth. But when you're setting a listing price, you'll want to get a CMA from a licensed agent.
Redfin and Zillow are among the two most popular home valuation sites. For off-market properties, Redfin's home value estimator error rate is 7.49%[1], while Zillow's Zestimate error rate is 7.06%.[2]
A home with a fair market value of $500,000 could be misvalued by as much as $37,450 on Redfin and $35,300 on Zillow.
CMAs are more accurate than online home value estimators for several reasons.
- Human vs. algorithm: CMAs are completed by a licensed professional who hand-picks the most relevant comparable sales, while sites like Zillow use an algorithm to pull comps automatically.
- Renovations considered: Online home sites can't see inside your home, so they probably won't know if you've renovated your kitchen or bathrooms, or made other value-enhancing improvements. An agent can give you credit for home renovations and upgrades.
- Fact-checking tax records: Realtors can pull information from a home's tax records to ensure that the correct information is used in the CMA report. Online sites sometimes pull wrong or outdated information from online listings or the MLS.
CMA vs. appraisal
Both CMAs and pre-listing appraisals are used to determine the fair market value of a home, but they are not the same thing.
- CMAs are typically created by real estate brokers and agents before a home is listed for sale. Appraisals are performed by a licensed appraiser during the mortgage underwriting process.
- CMAs provide an estimate of value and a listing price recommendation, while appraisals provide a documented opinion of value.
- Realtors often create a CMA before seeing a home in person, while appraisers inspect the interior and exterior of the home before completing the valuation.
- CMAs are free, while appraisals often cost $400–500 or more, depending on the market.
How to get a free CMA
Most real estate agents will give you a free CMA during a listing consultation to win your business and help you set a fair listing price.
To make sure your CMA is accurate and that you don't overprice or underprice your home, it's important to find the right agent. You want to choose a realtor who's highly qualified and knowledgeable about your local market.
Clever Real Estate can match you with top local agents from trusted brands like Century 21 and RE/MAX. You'll receive multiple hand-picked matches so you can compare your options and choose the agent with the best marketing plan and pricing strategy.
In addition, Clever negotiates exclusive savings on your behalf. You'll pay just a 1.5% listing fee in exchange for guaranteed full service from a traditional agent. Try Clever for free and interview as many agents as you want until you find the right fit — or walk away at any time with no obligation.
FAQ
Real estate agents often provide free CMAs as part of a listing presentation to prospective home sellers before a house is listed for sale. Get a free CMA from a top local agent.
You can do your own CMA reports by researching comparable home sales on real estate websites, such as Zillow or Realtor. But a local realtor can provide a more in-depth analysis of a home's value, and at no cost to you.
A CMA and appraisal are not the same thing. Real estate agents complete free CMA reports to provide an estimated home value for clients; licensed appraisers complete appraisal reports for banks or lenders who have ordered the report for home buyers.
The primary purpose of a comparative market analysis (CMA) is to determine a property's value. Most real estate agents will perform a free CMA for sellers, allowing them to set an accurate listing price. A CMA can also help a buyer know whether a home is priced well, allowing them to make a competitive offer.
Why you should trust us
I've been a real estate agent in South Carolina for three years (SC license number: 115238), during which time I've completed dozens of CMAs for prospective home sellers and clients. I'm also an active real estate investor and have completed CMAs to analyze flips and rental properties.
I pulled information from colleague Trent Seigfried's research on online home value estimators. Trent is a data scientist and a writer whose work has appeared in Business Insider, Christian Science Monitor, US News and World Report, among other publications.
