Comparative Market Analysis
What is a Comparative Market Analysis?
A comparative market analysis (CMA) is a side-by-side comparison of homes for sale and homes that have recently sold in the same neighborhood for the same price range. This information is further sorted by data fields such as single-family or condominium, number of bedrooms, bathrooms, etc. Its purpose is to show fair market value based on what other buyers and sellers have determined through past sales, pending sales, and homes recently put on the market.
How is a CMA created?
CMAs are generated by a computer program supplied by your real estate agent’s multiple listing service (MLS). The MLS is available to licensed members only, including brokers, salespeople, and appraisers who pay dues to gain access to the service’s public and proprietary data, including tax roll information, sold transactions, and listings input by all cooperating MLS members.
Listing agents generate CMAs for their sellers and buyers’ agents, and create them for their buyers so both sides know what current market conditions are for the homes they’re interested in comparing.
How Accurate is a CMA?
The CMA is essentially a snapshot in time. That is to say, it is based on the most recent available data, but it can be rendered instantly obsolete by a number of factors. This is because the market is constantly changing. Listings are opening, closing, getting reductions in price, etc.
A CMA can vary widely depending on the knowledge and skill of the person conducting the search. That is why it is extremely important to have access to a knowledgeable agent in order to price your home correctly.
As important as a CMA is, it should only be used as a tool and should not substitute for your real estate professional’s experience and advice.