What is the purpose of a comparative market analysis (CMA)?

The purpose of a comparative market analysis (CMA) is primarily to estimate property value by comparing it to similar properties that have recently sold in the same area. This analysis helps real estate professionals identify a reasonable market value for a property based on the actual sales of comparable homes, taking into account differences in size, location, condition, and features.

A CMA provides valuable insights for sellers looking to price their home competitively and for buyers wanting to understand if a property is fairly priced. The process usually involves gathering data on recently sold properties, current listings, and properties that were withdrawn from the market. By evaluating these factors, a CMA presents a well-rounded assessment of where a property stands in relation to the local market, which is essential for informed decision-making in real estate transactions.

This method is preferred over simply determining the highest value of a property, as it takes a more analytical and comparative approach rather than a subjective or isolated determination of worth. While assessing rental income potential or calculating renovation costs are important aspects of property evaluation, they are not the main focus of a CMA.