No two properties are identical, which is why choosing a sales price or offer price for a property can be challenging. That’s where the Comparable Market Analysis, or CMA, can be useful.
What is a CMA?
The CMA is a side-by-side comparison of properties for sale and properties that have recently sold in the same neighborhood and price range. Its purpose is to show fair market value, based on what other buyers and sellers have determined through past sales, pending sales and properties recently put on the market.
How is the CMA created?
CMAs are generated by a computer program supplied by your real estate agent’s multiple listing service (MLS). The MLS is available to licensed members only, including brokers, salespeople, and appraisers, who pay dues to gain access to the service’s public and proprietary data, including tax roll information, sold transactions, and listings input by all cooperating MLS members.
Listing agents generate CMAs for their sellers, and buyer’s agents create them for their buyers so both sides know what current market conditions are for the properties they’re interested in comparing.
How accurate are CMAs?
The CMA is a here-and-now snapshot of the market, based on the most recent data available, but it can instantly be rendered obsolete by a new listing, or a change of status in a property with the same criteria. Why? The market is constantly changing – new listings, pending sales, closed sales, price reductions, and expired listings.
CMAs can vary widely, depending on the knowledge and skill of the person inputting the search perimeters to the software as well as the number and type of data fields that are chosen. That means some features may not be included.
As informative as the CMA is, it should only be used as a tool and should not substitute for your real estate professional’s knowledge and advice.