A Comparative Market Analysis (CMA) is an evaluation of similar, recently sold properties (called comparables or comps) that are near a property or properties that you want to buy or sell. Buyers, sellers, or real estate agents perform a CMA report to establish and find a fair price range for the property the report is created for. The price range from the CMA can then be used as a guide to be used for establishing an offer price or a listing price.
Basically, performing a CMA involves finding the properties that are similar to the property under consideration, and creating an in-depth comparison of its size, age, location, and features of the property. It all comes down to one question: compared to other, comparable properties in this area, how much is this property worth? Answering that question involves looking at a fair amount of data on other properties in the current market.
The process for doing a comparative market analysis includes:
Defining criteria for selecting comparable properties in close range to the property
- Determine a list of quality comparable properties
- Evaluate the comparable properties within close range to the property
- Adjust comparable values for differences in size, condition, location, amenities, etc
- Estimate the ideal value of your target property based off the findings