Competitive Market Analysis (CMA)
What is a Competitive Market Analysis (CMA)?
A Competitive or Comparative Market Analysis (CMA) is a tool used by brokers and salespeople to assist consumers in determining a property’s asking price. It is not an appraisal. Appraisals can only be completed by licensed appraisers.
What information is included in a Comparative Market Analysis?
A CMA consists of information about three types of properties similar to the subject property: prices of those sold, on the market, and expired. It is important to note the comparisons must be made with properties with similar location, size, age, style, and amenities to the seller’s property.
The “sold” properties included in a CMA indicate what other buyers were willing to pay for a property similar to the subject property and are the base for the official appraisal. The “expireds” indicate the value other buyers have not been willing to pay for a property similar to the subject property. A seller’s agent should guide the seller into setting the list price in “competition” with those properties currently on the market. A CMA completed by the buyer’s agent can reassure the buyer that their offer is fair and in line with what others have paid.
Who completes a Competitive Market Analysis?
A CMA is completed by a broker or salesperson usually for the seller. A CMA is not completed by an appraiser.
Does a Comparative Market Analysis guarantee a property will sell?
No, there are no guarantees a property will sell. The fact that a CMA was completed on a property does not guarantee that the property will sell for the arrived at asking price. In fact, it doesn’t guarantee a property will sell at all.
Check out this sample real estate licensing test question about a Comparative Market Analysis:
In which of the following situations could a CMA (comparative market analysis) be completed in the place of an appraisal?
A. Deciding on a listing price for a property
B. Obtaining financing for a property purchase
C. Obtaining a second mortgage on a property
D. Determining value for eminent domain purposes
Explanation: The difference between a CMA (comparative market analysis) and a real estate appraisal is that one is done by a real estate broker and one is done by a licensed real estate appraiser.
A CMA is an estimate of a property’s value done by a real estate broker to establish a listing or offer price for a home or property.
A real estate appraisal is done by a licensed real estate appraiser and is most often used by lenders when issuing mortgages for refinancing or buying/selling a home. Appraisals, although, can also be used for any other reason a determination of value is needed or wanted.
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