What Is a Comparative Market Analysis? CMA Explained

Get help estimating your seller proceeds and pricing your home.

What a CMA is: a side-by-side of comparable sold, active, and pending homes

A comparative market analysis, or CMA, is a real estate agent's estimate of what a home is worth, built by placing that home next to similar properties that have sold, are active on the market, or are pending. The MLS, the private database real estate professionals use to share current listings, is where the raw material lives. ^[1] The result is a value range, not an exact price, and it is one of the most useful tools in the business for pricing a home to sell or deciding what to offer.

One home by itself tells you nothing. A CMA puts the subject home next to three groups: recently sold comps showing what buyers actually paid, active listings it is competing with, and pending sales that signal where prices are heading. Compare the three and a defensible range appears.

The inputs that matter: sold comps, days on market, price per square foot, and condition

The strength of a CMA comes down to the comps. The best ones are similar homes that sold recently, within the last three to six months if they are available, in the same immediate area. Then the agent weighs the rest of the evidence: days on market, price per square foot, condition, lot size, and upgrades. A home that sat for 90 days and a home that sold in a week tell you very different things about buyer demand.

Square footage gets handled with math. If a comparable has 200 more square feet than the subject home, the agent adjusts the comp's price down so the two can be compared fairly, and the reverse when the subject home is bigger. The same logic applies to an extra bathroom, a pool, or a remodeled kitchen. Every adjustment answers one question: what would this comparable have sold for if it were exactly like the home you are pricing?

How to read a CMA: the adjustments explain why a comparable sold higher or lower

Reading a CMA is really reading the adjustments. When a comparable sold for more than the subject home, the report should show why: a bigger lot, a newer roof, an extra garage bay. When it sold for less, the reasons should be visible too. If the adjustments do not add up, the comp is not comparable, no matter how close the address.

Skip the raw average and look at the adjusted range. Three comps that adjust to $300,000, $315,000, and $322,000 describe a range, not a single number. Your offer or your list price should sit inside that range, supported by the evidence, not above it on hope.

Who uses a CMA and when: buyers anchor offers, sellers price listings

Buyers and sellers use the same tool for opposite jobs. Buyers use a CMA to anchor an offer: it shows what the home is worth and how much room exists before an appraisal becomes a problem. Sellers use the same report to price a listing, because overpricing is the leading cause of homes sitting on the market.

In a competitive Texas offer situation, a CMA is also your reality check. When five buyers want one house, the comps tell you what the home is worth and your pre-approval tells you what you can pay. The intersection of the two is where a strong offer lives.

CMA vs appraisal: a market estimate vs the lender's professional valuation

A CMA and an appraisal serve different masters. A CMA is a market estimate prepared by a real estate agent or broker to inform pricing decisions, and it usually comes free as part of working with an agent. An appraisal is a professional valuation produced by a licensed appraiser hired by the lender, and it is the number the bank uses to decide how much it will lend.

That is why the two can differ, and why the lender's number wins: the loan is based on appraised value, not the CMA. And do not confuse either one with the county appraisal district value that drives Texas property taxes, which is a third number for a different job. ^[2] Know both numbers before you negotiate.