Comparative Market Analysis Guide

If you're interested in learning more about comparative market analysis, you've come to the right place! Read on to understand what a comparative market analysis is, the specific formula agents use, how to perform one, and if you need one. 

Table of Contents

What Is A Comparative Market Analysis (CMA) In Real Estate?
How to Do a Comparative Market Analysis
Comparative Market Analysis Example
Do You Need A Comparative Market Analysis?
Comparative Market Analysis FAQ

What Is A Comparative Market Analysis (CMA) In Real Estate?

A comparative market analysis is a tool that works to estimate the value of a property. It figures out the price by looking at the selling prices of other homes nearby. When looking at similar homes, a CMA considers all of the factors that go into the price a home may sell to buyers, from square footage to interior renovations. 

There's a lot to consider, both inside and out, when determining a home's value on the market. From the location and size to how well a property has been maintained, it's critical to look at everything to get an accurate picture. That's why a comparative market analysis is so useful.

How to Do a Comparative Market Analysis

To do a comparative market analysis yourself, you should follow a few steps to get a basic understanding of how you can compare your home to the houses in the area. Let's talk about each of these steps so you can get started if you want to complete a comparative market analysis for yourself, rather than hiring someone to do it for you.

1. Evaluate the neighborhood

First, evaluate the neighborhood around you. Look at the types of houses in the area, how big they are, and other relevant information. It's vital to know what the neighborhood looks like compared to other areas nearby. Amenities and nice living spaces can make a home more or less valuable.

2. Gather details about the subject property

Next, you need to gather details about the subject property. Figure out the location, features, bedrooms and bathrooms, acreage, the year built, renovations, and anything else that might go towards the subject's value. Take note of anything extraordinary a buyer might like.

3. Select comps

Pick some similar homes in the neighborhood to serve as comps for the home you're selling. These should have identical primary features. Determine how much they sold on the market. They should have sold in the last twelve months and should be close to your home.

4. Adjust for differences

Next, you can adjust for differences. If the comp home has an extra bedroom or bathroom, you might need to lower or raise your price. If they have a bigger yard, do the same. Look at all the features and note where your property falls behind and where it leads.

5. Determine the sold price per square foot after adjustments

Next, you should find the approximate price per square foot that the property will sell for after you've adjusted from the comp homes. You can determine an estimate at this point that you can put on the market. Ensure you double-check everything to get the most accurate price. 

Comparative Market Analysis Example

Do You Need A Comparative Market Analysis?

If you're a homeowner selling a home by yourself, a comparative market analysis is an excellent tool to help you determine the right price for your place. You can set it at a fair amount that will bring in a decent income for you and remain attractive to those interested in purchasing the space.

Still, it's critical to remember that an accurate comparative market analysis requires access to tools to determine the prices and features of other homes. You will need to put in extensive work to map out the information, which may not be possible for everyone.

Comparative Market Analysis FAQ

How do I get a CMA for my house?

You can either perform a comparative market analysis by yourself or hire someone to do it for you. You can even purchase a comparative market analysis online for a small fee. Services like Ownerly cost as little as $1 and can help you build a CMA report quickly. If you don't have the tools to do one yourself, you should pay for help.

Is a comparative market analysis free?

If you do a comparative market analysis yourself, it's free if you don't need to purchase any marketing software. If you decide to get someone else to do it for you, you will need to pay a small fee to get the information. It's worth the money.

What is the difference between an appraisal and a comparative market analysis?

An appraisal is an estimate of the value of your home, while a comparative market analysis takes the other homes in the area into consideration. Both are helpful to have, and you can even find the mean of the two to settle on a selling price.

How much is a bedroom worth in a CMA?

When using comparative market analysis, you can estimate that a room is worth about $20,000. This number can adjust depending on what the bedrooms in the comps are worth.

Can I do my own comparative market analysis?

If you have access to the right tools, you can do your own analysis. You will need to scout information about your neighborhood, search for comp houses, and find the price. It's hard work but worth it to save money when you sell.

What does a CMA cost?

Although some comparative market analyses are free, most agents charge somewhere between $100-$200 to complete one for a home. If you don't want to pay for a CMA you can interview multiple agents until you find one who offers one for free or perform a CMA yourself. 

Do Realtors give free market analysis?

Some realtors give free comparative market analyses, while others charge a fee to do this breakdown. You'll need to research agents in your area and contact them to see if anyone will give you an analysis for free.