Comparative Market Analysis: A Complete Guide to CMAs

Steve Nicastro

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Steve Nicastro

May 6th, 2022
Updated May 6th, 2022

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✍️ Editor’s note: Performing a comparative market analysis to determine a home's estimated fair market value is an important step in the home selling process. Here's why you should trust us.

What is a comparative market analysis?

A comparative or comparable market analysis (CMA) report provides an estimate of a home's value by comparing the recent sale prices of similar properties located nearby.

CMAs are a valuable tool for both realtors and their clients, helping sellers determine a fair listing price and allowing buyers to submit competitive offers. While you can complete your own CMA, an experienced realtor can provide the most accurate numbers (and for free).

Here's what you need to know about CMAs, including how to get a free CMA, how agents determine your home's value, an example of what the report looks like, and a step-by-step approach to completing your own CMA.

🔑 Key takeaways

  • A comparative market analysis (CMA) provides an estimate of a property's value based on comparable properties that have sold in the area.

  • The analysis considers multiple factors including the property's 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.

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.

👋 Get a free comparative market analysis!

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% 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 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 complete a refinance. Lenders typically require homeowners to have at least 20% 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

If you want to run your own CMA without an agent's help, here's a basic approach to use by pulling sales data from the home shopping website Zillow.

Step 1: Find homes in your area that sold recently

  1. Type in your city on the Zillow search bar.

  2. Check the box for "sold homes" to view only closed sales.

  3. Choose a sale price range that's within what your home is likely worth.

  4. Select a minimum bedroom and bathroom amount that's at least equal to your home.

  5. Choose your home type (single family house, townhouse/condo, or multi-family).

  6. Add a range of square footage that's within about 500 square feet of your home.

  7. Under the "sold in last" tab, select homes that have sold within the past six months.

  • Fill in 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 good comparable sales

Now that you've filtered through sold homes, you should have a pretty solid list of comparable properties to choose from.

Remember what factors make a good comp: Location, date of sale, size, condition, and age of home. It's also not a bad idea to browse through online photos to see if sellers made any interior or exterior upgrades.

Using this criteria, pick three homes that are most similar to your home and have sold the most recently.

Step 3: Calculate an 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
Adjusted valuation
$538,667

Measuring sales price per square foot is another way to estimate the value of your home.

To get an estimated value, you'll need to divide each home's sales price by its interior square footage.

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
The average sales price per square foot for the three comps is $202. If the subject home has 2,500 square feet, it carries an estimated value of $505,000.

Sale price
Square feet
Price per sq. ft.
$517,000
2,553
$203
$544,000
2,643
$206
$555,000
2,800
$198
The average sales price per square foot for the three comps is $202. If the subject home has 2,500 square feet, it carries an estimated value of $505,000.

A word of caution

Online home sites like Zillow aren't always accurate, so your numbers might not be, either.

One reason: Homeowners can change their home's listing information, including its number of bedrooms, bathrooms, and square footage.

Some homeowners might include an unheated basement in the home's total square footage – even if it's not included on the tax records – to make the house appear larger to home shoppers.

And while a bonus room or a finished basement adds to a home's value, rooms typically must have a door, a closet, and a window to be counted as a true bedroom (check a home's tax records to confirm information).

An experienced realtor who knows your local market will provide you with the most accurate home valuation.

💰 Find out how much your home is really worth!

Connect with the best agents from top brokerages in your area, and receive a free home valuation! In addition, when you list with Clever you'll also get:

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How does a CMA actually work?

A CMA is essentially an agent's estimate of your home's competitive market value based on what similar homes have recently sold for in your area.

To prepare a CMA, an agent will typically choose three or more comparable sales — or "comps" for short — which are homes that are similar to yours in location, size, and features.

The agent will then adjust the sales prices of those comps for minor differences, such as square footage, bedrooms, and bathrooms, and average them to get your recommended list price.

Comparative market analysis example

This image shows a real-world example of a comparative market analysis that I completed for a home in Charleston County, SC. CMA reports may look different in other markets or states, but they all include the same basic information.

CMA image

Note: Images are blurred for privacy.

The first two pages of a CMA report include photos and information about the subject property. The third page (image above) includes information on the subject property (second column), followed by three comparable sales in the area.

Each row includes information about the comparable sales, including distance from the subject property (in miles), list price, sold price, and date of sale, followed by various adjustments (bedrooms, bathrooms, and square footage).

The three comps chosen 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.

The following value adjustments were made:

  • 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.

Property value adjustment amounts were determined by using a recent appraisal report on a similar home in the subject property's market.

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.

The listing price recommendation is found on page 5 of the CMA. The subject home has an estimated fair market value of $528,773, which is an average of the adjusted prices of the three comparable sales.

Range
Price
Low
$476,380
High
$561,100
Recommended
$528,773

While CMA reports vary in length, most will include a summary of the property in question, as well as information on comparable properties in the immediate area. Here's what you can expect to find on each page:

  • Page 1: A map pinpointing the location of the subject property and comparable sales, with addresses and distance (measured in miles) from the subject home.
  • Page 2: A photo of the subject property taken from a previous MLS listing, and key property information including its number of bedrooms and baths, square footage, lot size, and age of home.
  • Page 3: A table with information on comparable properties including list price, sold price, date of closing, days on market, bedrooms, bathrooms, acreage, and year built, as well as any key adjustments in value.
  • Page 4: A price analysis graphic showing list prices, sold prices, and adjusted prices for the comparable properties, as well as low, average, median, and high sold prices.
  • Page 5: Summary of closed listings, repeating key information included in the previous pages, and an average sold price per square foot for every property.
  • Page 6: Listing price recommendation (low, high, and recommended) based on the adjusted sales prices of each property.
  • Pages 7-12: Individual MLS listing pages for each home. MLS listings may include information only available to realtors, including the type of financing used to buy the home, and if the seller paid any of the buyer's closing costs.

How accurate are CMAs?

CMAs tend to be more accurate than home value estimators like Zillow – but 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).

Who you choose to create your CMA report is equally important. Here are factors to consider when choosing an agent to 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.

Quick tip:

Watch out for real estate agents who inflate the value of your home in a CMA report. The agent may be trying to win your business by presenting you with a rosy figure. It may be worth getting a second or third opinion for a more accurate and balanced valuation.

» MORE: How to find a realtor you can trust

CMAs vs. home value estimators

Various websites provide free online home value estimates. These sites provide a good starting point, but the numbers shouldn't be taken too seriously.

Redfin and Zillow are among the two most popular home valuation sites. For off-market properties, Redfin's home value estimator error rate is 6.71%[1], while Zillow's error rate is 6.9%[2].

In other words, a home with a fair market value of $500,000 could be misvalued by as much as $33,550 on Redfin and $34,500 on Zillow.

CMAs are often more accurate compared to 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 the wrong or outdated information from online listings or the MLS.

» MORE: Which home value site is the most accurate?

CMAs vs. appraisals: What's the difference?

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 between $400 to $500 or more, depending on the market.

» MORE: What is a home appraisal, and do I need one?

CMAs for sellers

If you're thinking of selling your home and want to know what it could potentially fetch in a sale, you can get a free CMA from a local agent. There is no obligation, and we can connect you to top local realtors who can help.

Try Clever's free agent matching service, save thousands!

Clever offers top-rated local agents, full service, pre-negotiated low rates for sellers, and cash back for eligible buyers.

You can also try doing your own CMA – the report probably won't be as accurate as one provided by a realtor, but it may provide you with a good starting point.

Learn how to complete your own CMA.

CMAs for buyers

If you're ready to put an offer in on a home, it's a good idea to ask your agent to run a CMA.

Your agent should be able to provide you with a fair market value for the home based on recent home sales in the area.

Agents can show you what each relevant comparable home sold for, how long it took for them to sell, and if sellers paid any buyer concessions, like closing costs.

Talk to experienced real estate agents to discuss CMA reports and how to make a competitive offer on a house.

👋 Need a great agent on your side?

Connect with top local agents who can help you get a great deal on a new home. Eligible buyers will also get 0.5% of the price back as cash in their pocket after closing.

CMAs for investors

CMAs are useful tools for investors to find and analyze properties.

Investors can use CMAs to determine if a home is undervalued after factoring in all repairs needed to sell or rent out the property.

CMAs can help investors negotiate with sellers, too.

For example, a home that is less updated than its comps and in need of more repairs should carry a lower valuation. Showing a seller how you came up with your offer price may give you some leverage in negotiations.

» MORE: The ultimate rental property calculator

CMAs for refinancers

CMAs can be useful for determining your home's value to come up with a home equity percentage (you typically need at least 20% home equity to qualify for a refinance).

Realtors might not provide a free CMA report if you aren't planning to buy or sell anytime soon, so you have three other options:

  • Order an appraisal: A home valuation from a licensed professional who follows strict guidelines established by the Uniform Standards of Professional Appraisal Practice (USPAP). Appraisals are expensive, and your lender may require another one during the refinance process.
  • Order a broker price opinion (BPO): Like a CMA report, a BPO estimates your home's value based on its condition and the recent sale prices of similar homes located nearby. But unlike a CMA report, you might have to pay for a BPO ($150-$250).
  • Complete your own CMA: The DIY route is free, but requires some legwork. You'll need to run the numbers yourself to get an estimate of your home's fair market value, to see whether or not it's worth pursuing a refinance.

» MORE: What is a broker price opinion, and do I need one?

How to get a free CMA

Most real estate agents will give you a free CMA during a listing consultation as a way to win your business and help you set a fair listing price for your home.

To make sure your CMA is accurate and that you don't overprice or underprice your home, it's important to choose the right agent. You want to go with a realtor who's highly qualified and knowledgeable about your local market.

Clever 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% 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!

👋 Get a free CMA from a top local agent!

Before putting your home on the market, it's important to know your home's true value. Our licensed concierge team will connect you with top-rated realtors to perform a free professional CMA on your property — from a trusted brand like Keller Williams and RE/MAX.

Compare top local realtors until you find the perfect fit, then pay just 1% in listing fees when you sell your home. Or walk away at any time with no obligation. Find a top local agent today!

FAQs about CMAs

Yes. Real estate agents often provide free CMAs as part of a listing presentation to prospective home sellers before a house is listed for sale. Learn how to get a free CMA.

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.

  • 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.
  • 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.

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. Learn more about who should get a CMA.

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.

Related links

ARTICLE SOURCES
[1]

Redfin. "About the Redfin estimate." Accessed (January 12, 2022). Updated (January 11, 2022).

[2]

Zillow. "How accurate is the Zestimate?." Accessed (January 12, 2022). Updated (May 27, 2021).

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