Comparative market analysis (CMA) is a method real estate agents use to estimate a home’s current market value before listing it on the real estate market. This pricing strategy involves comparing the subject home against multiple comparable homes, or comps, based on factors such as size, condition, style, and location to determine a ballpark figure for the property value.

A CMA is an important tool to help sellers estimate a fair asking price while allowing homebuyers to make a competitive [offer](https://www.masterclass.com/articles/how-to-make-an-offer-on-a-house) on the house without overpaying. 

Real estate agents can quickly generate a CMA report using software, but it’s also possible for homeowners to carry out their own analysis. A sound report includes the subject property and three to five comparable properties, with the following data for each property, listed in a way that is easy to cross-reference: 

- __Description__: The description should include the address, [floor plan](https://www.masterclass.com/articles/floor-plan-guide-how-to-draw-your-own-floor-plan), elevation, number of bedrooms and bathrooms, and any other important features, like heating and air conditioning, flooring, and laundry. 
- __Size__: The report should list the [square footage](https://www.masterclass.com/articles/how-to-measure-square-footage-of-a-house) of each property. 
- __Sales price__: The report should list the price that each of the comparable properties sold for, any price adjustments, and the sold price per square foot. 
- __Estimated value__: Finally, the report will produce an estimated [fair market value](https://www.masterclass.com/articles/fair-market-value-explained) of the property under consideration. 

Hiring a real estate professional to prepare a CMA report in your area is the most accurate way to assess the value of a home, as they have access to more data points and a thumb on the pulse of real estate trends. You can, however, perform your own analysis using public data and a spreadsheet using the following steps: 

1. __Analyze the neighborhood__. First, familiarize yourself with the neighborhood wherein the subject house is located. Make a note of important features, including proximity to any amenities, quality of the local schools, most attractive blocks, curb appeal, and any possible annoyances, like active train tracks or busy streets. 
2. __Evaluate the subject property__. Create a detailed description of the subject home, listing the home’s age, lot size, square footage, layout, style, condition, landscaping, and upgrades.
3. __Select similar properties__. Next, find three to five similar homes which local sellers recently sold. The best comparable homes are ones that have recently been sold, ideally within the past six months, and as close as possible in size, style, quality, and construction type. The comparable sales should also be within the same school district and, ideally, no more than a mile away. 
4. __Adjust for differences__. With the subject property and comps in hand, evaluate and adjust for the differences between the two. 
5. __Calculate sold price per square foot__. Once the price adjustments are accounted for, calculate each comp’s price per square foot by dividing the adjusted price by its square footage. Then, take their average by adding those prices together and dividing by the number of comps. 
6. __Determine the subject home’s value__. Finally, take the comparable properties’ average price per square foot and multiply that by the subject property’s square footage to calculate its estimated fair market value. You may need to adjust this price depending on how similar the comps are and other real estate market trends. 

Comparative market analysis and appraisals are two different methods real estate agents and lenders use to determine the market value of a property. Comparative market analysis is a method that [real estate agents](https://www.masterclass.com/articles/how-to-become-a-real-estate-agent) use to estimate a listing price. At the same time, banks rely on [appraisals](https://www.masterclass.com/articles/home-appraisal-process-explained) whereby a licensed appraiser assesses the property and its surroundings to determine a fair valuation. These two methods do not necessarily arrive at the same figure; the former produces a general pricing estimation, whereas the latter is more of an exact science. 

A homeowner can prepare for an appraisal by doing some basic repairs and upgrades to maximize their property’s value, whereas those actions would not necessarily affect a CMA as that analysis is done through publicly available data. 

All you need is a [MasterClass Annual Membership](https://www.masterclass.com) and our exclusive video lessons from prolific entrepreneur Robert Reffkin, the founder and CEO of the real estate technology company Compass. With Robert’s help, you’ll learn all about the intricacies of buying a home, from securing a mortgage to hiring an agent to tips for putting your own place on the market. 
While real estate agents typically prepare a comparative market analysis report for their clients, home sellers on a budget can save money by learning how to perform their own CMA using a spreadsheet and available public data.


While real estate agents typically prepare a comparative market analysis report for their clients, home sellers on a budget can save money by learning how to perform their own CMA using a spreadsheet and available public data.


How to Do a Comparative Market Analysis (CMA) in Real Estate

Comparative market analysis (CMA) is a method real estate agents use to estimate a home’s current market value before listing it on the real estate market. This pricing strategy involves comparing the subject home against multiple comparable homes, or comps, based on factors such as size, condition, style, and location to determine a ballpark figure for the property value.A CMA is an important tool to help sellers estimate a fair asking price while allowing homebuyers to make a competitive <a href='https://www.masterclass.com/articles/how-to-make-an-offer-on-a-house' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/how-to-make-an-offer-on-a-house","linkCopy":"offer","category":null}'>offer</a> on the house without overpaying.

What Is a Comparative Market Analysis?

Real estate agents can quickly generate a CMA report using software, but it’s also possible for homeowners to carry out their own analysis. A sound report includes the subject property and three to five comparable properties, with the following data for each property, listed in a way that is easy to cross-reference: <ul class="mc-m-4 list-styled"><li class="">Description: The description should include the address, <a href='https://www.masterclass.com/articles/floor-plan-guide-how-to-draw-your-own-floor-plan' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/floor-plan-guide-how-to-draw-your-own-floor-plan","linkCopy":"floor plan","category":null}'>floor plan</a>, elevation, number of bedrooms and bathrooms, and any other important features, like heating and air conditioning, flooring, and laundry. </li><li class="">Size: The report should list the <a href='https://www.masterclass.com/articles/how-to-measure-square-footage-of-a-house' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/how-to-measure-square-footage-of-a-house","linkCopy":"square footage","category":null}'>square footage</a> of each property. </li><li class="">Sales price: The report should list the price that each of the comparable properties sold for, any price adjustments, and the sold price per square foot. </li><li class="">Estimated value: Finally, the report will produce an estimated <a href='https://www.masterclass.com/articles/fair-market-value-explained' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/fair-market-value-explained","linkCopy":"fair market value","category":null}'>fair market value</a> of the property under consideration. </li></ul>

What Is Included in a CMA Report?

Hiring a real estate professional to prepare a CMA report in your area is the most accurate way to assess the value of a home, as they have access to more data points and a thumb on the pulse of real estate trends. You can, however, perform your own analysis using public data and a spreadsheet using the following steps: <ol class="mc-m-4"><li class="mc-my-4"> 1. Analyze the neighborhood. First, familiarize yourself with the neighborhood wherein the subject house is located. Make a note of important features, including proximity to any amenities, quality of the local schools, most attractive blocks, curb appeal, and any possible annoyances, like active train tracks or busy streets. </li><li class="mc-my-4"> 2. Evaluate the subject property. Create a detailed description of the subject home, listing the home’s age, lot size, square footage, layout, style, condition, landscaping, and upgrades. </li><li class="mc-my-4"> 3. Select similar properties. Next, find three to five similar homes which local sellers recently sold. The best comparable homes are ones that have recently been sold, ideally within the past six months, and as close as possible in size, style, quality, and construction type. The comparable sales should also be within the same school district and, ideally, no more than a mile away. </li><li class="mc-my-4"> 4. Adjust for differences. With the subject property and comps in hand, evaluate and adjust for the differences between the two. </li><li class="mc-my-4"> 5. Calculate sold price per square foot. Once the price adjustments are accounted for, calculate each comp’s price per square foot by dividing the adjusted price by its square footage. Then, take their average by adding those prices together and dividing by the number of comps. </li><li class="mc-my-4"> 6. Determine the subject home’s value. Finally, take the comparable properties’ average price per square foot and multiply that by the subject property’s square footage to calculate its estimated fair market value. You may need to adjust this price depending on how similar the comps are and other real estate market trends. </li></ol>

How to Perform a Comparative Market Analysis

Comparative market analysis and appraisals are two different methods real estate agents and lenders use to determine the market value of a property. Comparative market analysis is a method that <a href='https://www.masterclass.com/articles/how-to-become-a-real-estate-agent' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/how-to-become-a-real-estate-agent","linkCopy":"real estate agents","category":null}'>real estate agents</a> use to estimate a listing price. At the same time, banks rely on <a href='https://www.masterclass.com/articles/home-appraisal-process-explained' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/home-appraisal-process-explained","linkCopy":"appraisals","category":null}'>appraisals</a> whereby a licensed appraiser assesses the property and its surroundings to determine a fair valuation. These two methods do not necessarily arrive at the same figure; the former produces a general pricing estimation, whereas the latter is more of an exact science. A homeowner can prepare for an appraisal by doing some basic repairs and upgrades to maximize their property’s value, whereas those actions would not necessarily affect a CMA as that analysis is done through publicly available data.

Comparative Market Analysis vs. Appraisal: What Are the Differences?

All you need is a <a href='https://www.masterclass.com' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com","linkCopy":"MasterClass Annual Membership","category":null}'>MasterClass Annual Membership</a> and our exclusive video lessons from prolific entrepreneur Robert Reffkin, the founder and CEO of the real estate technology company Compass. With Robert’s help, you’ll learn all about the intricacies of buying a home, from securing a mortgage to hiring an agent to tips for putting your own place on the market.

Ready to Learn the Ins and Outs of the American Housing Market? 

While real estate agents typically prepare a comparative market analysis report for their clients, home sellers on a budget can save money by learning how to perform their own CMA using a spreadsheet and available public data.