Comparative Market Analysis: How to Build a CMA

A comparative market analysis, or CMA, is a listing agent’s estimate of what a home is likely to sell for, built from recent sales of similar homes and the competition currently on the market. Every agent has software that will produce one in a few minutes. What the software cannot do is decide which sales really compare, what the differences are worth, or how to explain the result to a seller who has a different number in mind. This guide covers those judgment calls: how to choose comps, how to adjust them, what changes when the house is inherited and sold as-is, and how to present the range honestly.

Everything here is general guidance. MLS rules, licensing rules on valuation opinions, and probate procedures vary by state, so check your brokerage’s policy and, on an estate, the attorney handling it. Nothing here is legal, tax, or appraisal advice.

What a comparative market analysis is, and is not

Sellers tend to lump every home value they have seen into one idea. It helps to separate them, because each one answers a different question.

A CMA is a licensee’s opinion of a likely market price, prepared to help a seller decide how to list. It is not an appraisal, and it should say so on its face. Some states and many brokerages require specific language, and some states limit what a licensee who is not an appraiser may do or charge for a valuation opinion.

An appraisal is a value opinion from a licensed or certified appraiser, following professional standards, usually for a lender, a court, or a tax purpose. When someone needs a formal value, a CMA does not stand in for one.

The tax assessed value exists to allocate property tax. Depending on the state, it can lag the market by years or be limited by assessment caps, so it may sit far from a realistic sale price in either direction.

An online estimate comes from an automated model working from public records and listing data. It has not seen the kitchen, the roof, or the water stain on the ceiling. It can be a reasonable starting point for an ordinary house and badly wrong for an unusual one, or for one that has not been touched in 40 years.

Choosing comps that hold up

The costliest CMA errors usually start here, before any arithmetic. A good comp is a home a buyer of your subject property would also have considered. The usual starting filters are rules of thumb, not laws: closed in roughly the last three to six months, close by, same property type, similar age and style, and similar living area. A fast market or a dense subdivision lets you tighten them. A rural area or an unusual house forces you to widen them, and when you do, your report should say so.

Pull more than closed sales, because each status tells you something different:

Sold listings show what buyers actually paid. Only these support a value conclusion, and they are the backbone of the report.

Pending listings are the freshest signal of where the market is moving, though you know only the asking price until they close. A call to the listing agent may tell you whether it drew multiple offers, if they are willing to share.

Active listings are your seller’s competition, not evidence of value. Asking prices tell you what buyers will compare the house against next weekend.

Expired and withdrawn listings show what the market declined at a given price and condition. A seller who insists on a high number should see them.

Then read every comp instead of trusting the search results. Open the listing history and the photos. Check whether the sale price included a seller credit, since a $400,000 sale with a $10,000 credit is not the same as a clean $400,000. Screen out sales that did not reflect an open market, such as transfers between relatives, and treat foreclosures and short sales with care. Base every choice on the property and the market. Never select or describe a comp by who lives in a neighborhood; beyond the fair housing exposure, it is not a valid reason for a price difference.

Adjusting the comps to the subject

No comp is identical to your subject, so you adjust each sale price to estimate what that home would have brought if it matched yours. The direction trips people up, so keep one rule in view: you adjust the comp, not the subject. If the comp is better than the subject in some way, subtract. If the comp is worse, add.

The usual adjustments are living area, condition and updates, garage or parking, bedroom and bathroom count, lot, and location factors like a busy road. If prices have moved since the comp closed, add a time adjustment too. The best source for what a feature is worth locally is paired sales, meaning two similar homes that differ mainly by that feature. Be careful with the average price per square foot as a size adjustment. Extra space is usually worth less per foot than the whole house, because that average also carries the land and the kitchen.

Fewer comps with small adjustments beat many comps with large ones. If a sale needs heavy adjustment, either give it less weight or replace it. And if your adjusted prices still sit far apart, treat that as a warning that one comp does not belong or one adjustment is wrong. Do not average the disagreement away.

A worked example

These numbers are made up to show the arithmetic. They are not typical values for any market. The subject is a 1,600-square-foot house with a one-car garage, original kitchen and baths, and a sound roof. For this market, assume $100 per square foot for a size difference, $8,000 for a second garage bay, and no time adjustment because prices have been flat.

Comp A, 1,550 square feet, dated like the subject, two-car garage, sold for $372,000.
Size +$5,000, garage −$8,000. Adjusted: $369,000

Comp B, 1,640 square feet, renovated kitchen and baths, one-car garage, sold for $415,000.
Size −$4,000, condition −$45,000. Adjusted: $366,000

Comp C, 1,500 square feet, dated, one-car garage, needed a new roof at sale, sold for $352,000.
Size +$10,000, roof +$10,000. Adjusted: $372,000

Raw sale prices spanned $63,000. Adjusted, they span $6,000, and they point at the high $360,000s to low $370,000s. Real comps rarely line up this neatly. Comp B carries the largest adjustment, so it deserves the least weight, and Comp A, which needed the least, deserves the most. Now add the market context. Suppose a similar dated house listed at $369,000 went pending in nine days, while another has sat at $389,000 for 40 days and just cut its price. That supports a list range of about $365,000 to $375,000, and it gives the seller a real example of what happens to a house priced above that range.

A CMA for an inherited home

The method is the same on an estate sale. The inputs and the people around them are not.

Condition drives the comp set. Inherited homes are often sold as-is after decades of one owner, and a search that returns renovated neighbors will produce a number the house cannot reach. Look for other dated or as-is sales first, including other estate and trust sales that went through the open market. If the family is weighing repairs, build a second scenario instead of blending the two. That decision is covered in the as-is versus renovate conversation, and a pre-listing inspection can replace guesses about the roof or the furnace with facts.

A CMA before the walkthrough is provisional. Public records and exterior photos can tell you size, age, and recent neighborhood sales. They cannot tell you about the inside of a house no one has updated or, in some cases, entered for a while. Label an early CMA as preliminary, and revise it once the person with authority has let you walk through.

The appraisal and the CMA answer different questions. An estate may have an appraisal for the probate inventory or for tax basis, often stated as of the date of death. Your CMA estimates what the house can bring today in its current condition. The two can differ, and that difference is not automatically an error in either one. Do not reconcile them yourself. The basis side belongs to the family’s tax advisor, as explained in the guide to step-up in basis. Also ask the attorney whether a court-related value limits the price. In some states and some supervised sales, an appraised value can set a minimum acceptable offer or trigger court review, and it is better to know before you quote a range.

Know who you are preparing it for. Only someone with legal authority can sign the listing, and that may not be the relative who called you. It is worth confirming who can actually sell the home before the CMA starts circulating. When siblings are involved, ask the fiduciary whether they would like the same version sent to everyone at the same time, because a number shared secondhand tends to change along the way. There is more on that in working with multiple heirs.

From adjusted comps to a price range

Show a range, then recommend where to list within it, and explain why. Weight the comps that needed the least adjustment. Then look at the supply: how many similar homes are active, how long they have been sitting, and how recent sales closed against their list prices. In a tight market you may list near the low end of the range to draw attention. With plenty of competition, the most important decision is not to be the highest-priced house with the oldest kitchen. Watch search brackets as well, since a house listed just above a common price cutoff drops out of the searches of buyers who stopped at that cutoff.

Sellers do not spend a list price, they spend what is left. Once the range is set, run it through a seller net sheet at the low and high ends, so the conversation covers proceeds as well as the headline figure.

Presenting the CMA to the seller

A long automated report rarely helps. Most sellers want to see the handful of comps that matter, with photos, and to understand why those homes and not the one down the street that a neighbor keeps mentioning. Walk through three to five sales and the current competition, show the adjustments in plain dollars, and then give the range. If you drove past a comp or toured it, say so. It tells the seller you did more than press a button.

Expect a competing number and take it seriously. If the seller brings an online estimate or the assessed value, explain what it is and what it could not see, rather than dismissing it. Then ask what would need to be true for the higher number to hold, and show them the sales or the lack of them. Many sellers will reach a realistic conclusion faster that way than if you simply argue the point.

On an inherited home, remember who is in the room. The family may be looking at the house they grew up in, and an adjustment that reads “condition: minus $45,000” can land as a judgment on a parent who lived there for 50 years. Talk about what today’s buyers are comparing it with, not about what is wrong with the home. Timing matters, too. A CMA sent unasked to a family early in their grief is unlikely to win the listing, and it may cost you the chance to help. It belongs in a conversation they invited. For how an unprompted CMA tends to stall and what a real appointment looks like, see how to get listing appointments.

Finally, do not buy the listing with a high number. A price set to beat other agents can leave the seller with extra carrying costs and a stale listing, and a price cut tends to cost you more credibility than an honest range would have at the start.

The bottom line for listing agents

A comparative market analysis is only as good as the comps you choose and the adjustments you can defend. Read every comp, adjust the comp rather than the subject, weight the sales that needed the least adjustment, use active and expired listings for context, and present a range along with your reasoning. On an inherited home, match the comps to the actual condition, label early work as preliminary, keep the CMA separate from any appraisal, and deliver it to the person with authority, with care for what the house means to the family.

The best-prepared CMA still needs someone to present it to. Finding inherited-home families and reaching them respectfully, with the public-record context in hand, is the subject of the complete guide to pre-listing leads for realtors.