What Is a CMA in Real Estate? How to Properly Price Your Home

Pricing your home is the first big obstacle you’ll encounter when you decide to sell. 

There’s really no one-size-fits-all answer. You want a price that’s not so high that it turns away buyers and not so low that you sell below its market value. 

Sellers often struggle with setting the right price, but that’s where your real estate agent can help! In fact, help with pricing homes competitively is what sellers (23%) most want from real estate agents, according to the 2023 National Association of Realtors (NAR) Home Buyers and Sellers Generational Trends report. A comparative market analysis, or CMA, is one pricing strategy you can use to find out how much your home is worth.

Let’s go over what is a CMA in real estate and why getting the price right is crucial to selling your home for top dollar in the current market.

What Is CMA in Real Estate?

A comparative market analysis (CMA) in real estate is a strategy that real estate professionals use to estimate a home’s value and help sellers set listing prices. The analysis compares the seller’s property against recently sold properties similar in location, size, features, and more. These properties are also known as comps, or comparable sales.

Comparable homes should ideally be within the same ZIP code and school district and have similar square footage, number of bedrooms and bathrooms, features, and upgrades. CMAs also analyze the most recent sales, typically between three and six months. Additionally, CMAs should look at the final sales prices of homes, not the listing price, as those numbers may be based on the sellers’ hopes rather than reality.

How Do Agents and Sellers Use CMAs?

A CMA is a must-have for sellers. Comparing your home against similar homes in the same area that recently sold can help you price your home competitively and prevent you from asking for too much or too little. A detailed CMA report can reveal:

• A summary of similar home’s features and upgrades.
• Recent sale prices of comparable homes in your neighborhood.
• How long it takes similar homes to sell on the local market.
• What homes sell for compared to their asking prices.
• How much certain upgrades and features can add to the value of the property.

What’s Goes Into a CMA?

Your agent will gather a list of at least three to five similar properties in the same neighborhood that have sold within the last three to six months. If there’s not enough data, your listing agent may also include active listings, pending listings, expired listings, and off-market listings in their CMA report.

Here are the components that make up a comparative market analysis:

• Location: CMAs include the address of the subject property and at least three comparables. The comps should be in the same neighborhood and school district.
• Size: Comps should have a similar lot size and livable square footage. Typically, the more space, the higher the home price.
• Number of bedrooms and bathrooms: More bedrooms and bathrooms can also increase the price.
• Age and condition: The year the home was built and its condition affects how much buyers are willing to pay. New construction homes built with high-quality materials sell for more, but updated historical homes can also have a higher price.
• Features and upgrades: The CMA will include special features, such as pools, garages, fireplaces, finished basements, and more. However, not all features and upgrades may increase the home's value.
• Date of sale: Comparables should have sold within the last six months.
• Sale price: The final sales price of each comparable property

Real Estate CMA Example

Let’s say your home is 3,000 square feet and has four bedrooms and three bathrooms. You also have two fireplaces, a two-car garage, and a finished basement. Your neighbor down the street sold their home three months ago for $650,000, and the home was 3,200 square feet with four bedrooms, three bathrooms, three fireplaces, a one-car garage, and a fully finished basement.

These two properties are similar but not exactly alike. This is why your real estate agent will look at several properties to get the best estimate.

Another home in the same neighborhood sold for $625,000 four months ago. This home was 2,900 square feet, had the same number of bedrooms and bathrooms, and had one fireplace, a two-car garage, and a partially finished basement.

Again, this property is similar to the subject property, but there are a few differences. This example doesn’t go into the same level of detail as a CMA or include as many comps as it should, but it’s likely that the seller’s home will sell for something between these two prices.

Is a CMA the Same as an Appraisal?

A CMA and an appraisal are both professional opinions on a home’s fair market value, but they’re not the same.

An appraisal is an unbiased assessment of how much a home is worth and is performed by a licensed real estate appraiser. Appraisers inspect the interior and exterior of the home and research recent sales of similar properties to determine its value. The mortgage lender typically orders the appraisal on behalf of the borrower to ensure the home is worth enough to guarantee the loan and to determine the interest rate down payment amount.

CMAs are created by licensed real estate agents or brokers on behalf of the home seller and provide an estimate of value and a recommended listing price for the home.

Can I Do My Own Comparative Market Analysis?

You can perform your own CMA by researching comparable properties on listing sites or browsing public records. However, a real estate agent has the local market knowledge and expertise to provide a more in-depth analysis. Plus, they also have access to the multiple listing service (MLS), which includes additional information not found online.

Pricing your home correctly is crucial. A well-priced home is more likely to attract multiple offers and lead to a faster sale. Pricing too highly can discourage buyers and result in a forced price drop or a stale listing. But if your price is too low, you could leave thousands of dollars on the table.

Are you selling your home in Washington DC, Maryland, or Northern Virginia? Send me a message and schedule a time to discuss my approach to pricing to help sell your home faster and for the highest possible price! I have years of experience in the DC housing market, so you can feel confident in my home value recommendation.