What is a comparative market analysis (CMA) used for?

A comparative market analysis (CMA) is a tool used to estimate a property's market value based on the sale prices of similar properties that have recently sold in the area. This approach takes into account various factors, including location, size, condition, and amenities, to establish a fair and accurate value for the property in question. By analyzing comparable properties, real estate professionals can provide homeowners and buyers with a realistic perspective on what a property is worth in the current market.

This method is crucial for setting competitive listing prices, negotiating offers, and making informed decisions, as it directly reflects current market conditions. The use of recently sold properties ensures that the analysis is relevant and grounded in actual sales data rather than speculation or outdated pricing.

In contrast, estimating a property's value based solely on its original listing price may not reflect current market dynamics. Limiting the comparison to properties only within the same neighborhood can result in an incomplete analysis, as properties in different neighborhoods could share similar characteristics and values. Additionally, determining commission rates of agents is unrelated to property valuation and falls under the scope of agent agreements rather than market analysis.