What is a CMA in real estate and how is it used

Last updated on July 8th, 2025 at 08:13 pm

Quick Answer

• A Comparative Market Analysis (CMA) is a report that estimates a property’s value by comparing it to similar properties in the same area.
• Real estate agents and appraisers use CMAs to help buyers and sellers make informed pricing decisions.

What is a Comparative Market Analysis?

A Comparative Market Analysis (CMA) is an exhaustive report

This is how real estate professionals determine the fair market value and provide pricing recommendations.

A CMA compares the subject property to homes that were recently sold or are currently listed in the same area so that a price can be reasonably set with current market conditions in mind.

How Does a CMA work:

It works through an orderly comparison process as below:

Step 1: Property Selection

The agent identifies similar properties under the following key criteria: location, size, age, and features.

Step 2: Data Analysis

The sales price is compared to all other factors such as square footage, lot size, number of bedrooms and bathrooms, etc.

Step 3: Adjustments

The realization of differences between properties is accomplished through agent adjustments to determine their fair market value.

Step 4: Market Context

Trends and conditions of the current market are to be taken into account with the final analysis.

Why is a CMA Important: 

For Home Buyers

• Informed Decision Making: Know the fair market value before putting things into perspective
• Competitive Advantage: Know recent sales information to place bids satisfactorily
• Negotiation Power: Back up your offer price with market data

For Home Sellers

• Accurate Pricing: List your price in accordance with current market conditions
• Faster Sales: Proper pricing will lead to quicker and successful sales
• Market Positioning: Get to know how your property fares in comparison with its competitors

Key Components of a CMA

1. Sales Comparison Approach

This method compares recently sold properties to your home, making adjustments for differences in features and conditions.

2. Comparable Property Analysis

The CMA evaluates similar properties based on:

• Location and neighborhood
• Square footage
• Number of bedrooms and bathrooms
• Lot size
• Special features and upgrades
• Property condition and age

3. Property History

Information about your property’s previous sales helps evaluate:

• Price changes over time
• Market performance trends
• Value appreciation or depreciation

4. Market Trends and Conditions

Current market factors include:

• Average days on market
• Listing price to sold price ratios
• Inventory levels
• Market competitiveness

How to Gather and Analyze Comparable Properties

Setting Selection Criteria

Choose comparable properties based on:

• Location: Same neighborhood or school district
• Size: Similar square footage and lot size
• Features: Comparable bedrooms, bathrooms, and special features
• Age and Condition: Similar property age and condition

Data Sources

Real estate professionals use multiple sources:

• Multiple Listing Service (MLS) databases
• Online real estate portals
• Local property appraiser websites
• Public records and tax assessments

Analysis Process

1. Narrow Down Options: Remove properties with significant differences
2. Analyze Sold Prices: Review recent sale prices of similar homes
3. Make Adjustments: Account for differences in size, features, and condition
4. Evaluate Results: Determine fair market value range

Evaluating Market Trends and Conditions

Key Market Indicators

Sales Data

• Recent sold prices of similar properties
• Price adjustments during listing periods
• Time properties spend on the market

Inventory Levels

• High inventory = buyer’s market (lower prices)
• Low inventory = seller’s market (higher prices)

Days on Market

• Quick sales indicate competitive market or high demand
• Longer market times suggest slower conditions

Factors Affecting Market Trends

Economic Factors

• Employment rates
• GDP growth
• Interest rates
• Local economic conditions

Demographics

• Population growth
• Migration patterns
• Household demographic changes

Location Factors

• Proximity to amenities
• Transportation access
• Neighborhood desirability
• School district quality

Assessing Property Features and Upgrades

Square Footage: Measure the total square footage of the property, including both finished and unfinished areas.

Note the size of each room, including bedrooms, bathrooms, kitchen, and living areas.

Compare the square footage with similar properties in the neighborhood to determine a fair market value.

Lot Size: Assess the size and shape of the property’s lot.

• Consider any land improvements, such as landscaping or additional structures.
• Determine how the lot size compares to other properties in the area.

Number of Bedrooms and Bathrooms: Count the number of bedrooms and bathrooms in the subject property.

Compare the number of bedrooms and bathrooms with similar properties to gauge the value.

Special Features and Upgrades: Identify any special features or upgrades that enhance the property’s appeal.

• Examples include a renovated kitchen, updated appliances, hardwood floors, or a swimming pool.

Consider the desirability and market value of these features when assessing the property.

School District: Evaluate the school district in which the property is located.

Research the reputation and quality of schools, as it can have a significant impact on property value.

Highlight the advantages of the property’s proximity to highly-rated schools in your CMA report.

Considerations and Limitations in a CMA:

Limitations of Scope

• Historical Data: Based on past sales, which may or may not be the current state of affairs
• Property Condition: May disregard specific conditions or peculiarities inherent to the property
• Market Changes: Real estate markets change fast

Comparison Difficulties

• Finding True Comparables: True comparative sale data are difficult to obtain
• Subjective Factors: Variances in lot size, features, and condition affect the level of accuracy
• External Factors: Changes in neighborhoods, new developments, or zoning alterations are not considered

Market Volatility

On the flip side, interest rate changes, employment levels, and demand in the sector easily result in price changes.

Professional Considerations

• Local Expertise: Regional knowledge is important in making proper assessments
• Individual Circumstances: With each property is a unique set of circumstances
• Official Appraisal: CMAs are not official appraisals required by lenders

Final Take-aways

Here is what a CMA does:

• Provides realistic pricing expectations
• Helps create competitive offers
• Supports pricing strategies Offers market insights and trends
• Understand the limitations of CMA data 

If you’re looking to sell a house fast in Arlington, it’s important to work with a knowledgeable real estate professional who can guide you through the CMA process.