What is Comparative Market Analysis in Real Estate?

Whether you’re buying or selling a home, understanding the property’s true market value is essential–and that’s where a Comparative Market Analysis (CMA) comes in. A CMA is a vital tool used by real estate professionals to estimate a home’s value based on recently sold, similar properties in the same area. Unlike a formal appraisal, a CMA is typically prepared by a licensed real estate agent to help clients make informed pricing and offer decisions.

Knowing how to analyze the local market using a CMA is a crucial skill for anyone involved in real estate. From identifying comparable properties to adjusting for unique features, learning how to conduct an accurate CMA helps agents price homes competitively and guide clients with confidence. The sections below will walk you through everything you need to know about CMA in real estate.

What is Comparative Market Analysis?

A CMA is a pricing tool real estate professionals use to estimate a property’s current market value. It’s based on an evaluation of recently sold homes, referred to as “comps,” that share similar characteristics with the property being analyzed. 

When preparing a CMA, agents consider several key factors to ensure an accurate comparison, including:

• Square footage and overall layout
• Number of bedrooms and bathrooms
• Lot size and property type
• Condition and age of the home
• Special features or upgrades, such as finished basements, pools, or renovated kitchens
• Proximity to the subject property (typically within a 1-mile radius)
• Sales data from the past 3 to 6 months

The goal is to evaluate how the subject property compares to others that have recently sold, are currently listed, or were pulled off the market. This helps sellers price their homes competitively and allows buyers to make informed, fair offers based on real market data.

Although similar in purpose, a CMA is not the same as an appraisal. A CMA is an informal market estimate prepared by a real estate professional, while an appraisal is a formal valuation conducted by a licensed appraiser, often required by mortgage lenders. Still, a CMA plays a critical role in real estate transactions by helping all parties understand a property’s current value based on local market trends.

Who Prepares a Comparative Market Analysis?

A CMA is typically prepared by a licensed real estate agent or broker. These professionals have access to the Multiple Listing Service (MLS), which provides the most accurate and up-to-date property data needed to conduct a thorough CMA.

Because CMAs require a deep understanding of local market conditions, it’s important that the person preparing the report is familiar with the area. Real estate agents use their knowledge of neighborhoods, recent trends, and buyer behavior to select appropriate comparable properties and make informed adjustments based on features, upgrades, or location.

Preparing a CMA is a skill taught during real estate prelicensing education and is refined through experience. Agents learn how to:

• Analyze sales history and active listings
• Select and evaluate comparable homes
• Adjust values for the difference between properties
• Present the CMA results clearly to buyers or sellers

Although online valuation tools exist, they often lack the nuance and local expertise of a CMA prepared by a trained real estate professional. For this reason, buyers and sellers are encouraged to work with licensed agents who can provide a personalized and accurate market analysis.

What Factors Are Included in a Comparative Market Analysis?

A well-prepared CMA goes beyond simply comparing home prices–it considers a variety of factors that influence a property’s market value. Real estate professionals evaluate both qualitative and quantitative data to ensure the analysis accurately reflects current market conditions and the specific features of the subject property.

The following factors are typically included in a CMA:

• Recently Sold Homes: The most important comps are homes that have sold within the last 3 to 6 months. These provide real-world data on what buyers are willing to pay.
• Active Listings: Current homes on the market help gauge the level of competition and indicate where the property may fit in the local price range.
• Pending Sales: Homes under contract can signal pricing trends, though final sale prices are not yet confirmed.
• Expired or Withdrawn Listings: These show properties that did not sell, often due to overpricing, and help agents avoid similar mistakes.
• Market Conditions: Factors like housing supply, average days on the market, seasonal trends, and interest rates all influence pricing strategies and how a CMA is interpreted.

Real estate agents analyze this data as a whole–not just individuals comps–to develop a realistic price range. They may also factor in local knowledge, such as upcoming zoning changes, school ratings, or planned developments, to better position the property within its unique market.

By focusing on both the numbers and the market narrative, a CMA provides buyers and sellers with a clear, evidence-based foundation for pricing and negotiating.

How a Comparative Market Analysis Helps Buyers and Sellers

A CMA plays a critical role in guiding the pricing, negotiation, and offer strategies on both sides of a real estate transaction. Beyond identifying a property’s estimated value, a CMA also plays an important role in shaping real estate strategies for both buyers and sellers. 

Sellers Use a CMA To:

• Establish a Pricing Strategy: Agents use CMAs to recommend a price that aligns with recent sales while accounting for current competition. This helps position the home to generate interest early in the listing period.
• Timing the Listing Appropriately: Market data from the CMA may reveal seasonal trends or shifts in buyer demand that influence when to go live on the MLS. 
• Justify the Listing Price to Prospective Buyers: A well-documented CMA helps agents present pricing rationale during open houses or buyer negotiations, especially when justifying higher pricing due to upgrades or location advantages.
• Adjust Pricing After Launch If Needed: If a home sits on the market without activity, sellers can revisit the CMA and update it with new data to decide if a price reduction is necessary. 

Buyers Use a CMA To: 

• Evaluate a Home’s Asking Price: Buyers and their agents review the CMA to see if the listing aligns with recent sales or appears overpriced based on the condition or location.
• Formulate an Initial Offer: A CMA can help determine whether homes in the area are selling above, at, or below the asking price, enabling buyers to make more strategic offers. 
• Plan for Bidding Wars or Contingencies: In hot markets, the CMA can reveal how quickly similar homes are selling and if competitive bidding is likely, allowing buyers to prepare accordingly.
• Negotiate After the Inspection: If a post-inspection negotiation is needed, the CMA can help support a lower price request by showing what similarly priced homes offer in terms of condition. 

Instead of simplifying estimating value, a CMA becomes a decision-making framework–used before listing, during negotiations, and throughout the transaction to keep strategy aligned with current market conditions.

Comparative Market Analysis vs. Appraisal: When and Why Each is Used

Although a CMA and a home appraisal both evaluate property value, they serve different purposes and appear at different stages of a real estate transaction. The CMA is typically used at the beginning of the buying or selling process. It helps determine a pricing strategy and guides decisions before a contract is signed. For example:

• Sellers use a CMA to set an informed, competitive listing price based on recent comparable sales
• Buyers may request a CMA from their agent to evaluate whether the asking price for a home is reasonable
• Agents may update a CMA during a listing period if market conditions shift or new comps become available

In contrast, the home appraisal is usually ordered after an offer has been accepted. It’s required by most lenders to confirm that the property’s value aligns with the loan amount. Appraisals are:

• Conducted by a licensed appraiser rather than an agent or broker
• Legally recognized by lenders and financial institutions
• Often a determining factor in whether financing is approved
• Paid for by the buyer as part of the mortgage process

While the CMA is focused on market positioning and strategy, the appraisal serves as an objective valuation for loan approval. Both are valuable, but they’re used for different reasons and at different times during a real estate deal.

How to Learn CMA Skills as a Real Estate Professional

Kaplan Real Estate Education helps real estate professionals build essential pricing and market analysis skills through comprehensive prelicensing, exam prep, and continuing education courses. Whether you’re preparing for your license or expanding your expertise, Kaplan’s flexible online programs cover everything from property valuation to effective pricing strategies–including how to conduct a CMA. No matter where you are in your career, you’ll gain the knowledge and tools to navigate today’s real estate market with clarity and precision.