Real estate is a key piece of the broader economic landscape, and RealtorsⓇ provide market information to help buyers, sellers, and the public understand market trends. One of the most valuable tools we use to share this insight is the comparative market analysis (CMA).
What is a Comparative Market Analysis?
A CMA is created for a property owner who may be interested in selling their home. It outlines local market activity (active, pending, and recently sold properties) to guide decisions about listing price, timing, and marketing strategies. Used for all types of real estate (residential, vacant land, commercial, etc.), a CMA typically includes information on similar listings for comparison and a summary with data points such as average and median list price, sold price, days on market, and current competition - other active listings that offer similar amenities. Often paired with additional information about the broader market, the RealtorⓇ and brokerage, and a specific marketing plan, a complete listing presentation highlights not only your property but why you should work with a particular broker. Requesting and receiving a CMA does not create an obligation to use that broker, representation is only that relationship is determined later by a listing agreement.
Comparative Market Analysis vs. Market Valuation
Market valuations are similar to CMAs in that the goal is to provide information about the value of a property. However, valuations are much more general in nature and give a rough estimate of value based on location, included amenities such as views or water frontage, and general size and condition of existing structures. A market valuation is a great tool for someone just starting to think about selling their home, or if they want to see how much equity they’ve built over time.
Comparative Market Analysis vs. Appraisal
A CMA or market valuation differs from an appraisal - an appraisal is performed by a licensed appraiser, not a RealtorⓇ. This professional is hired by the buyer or their lender after a home is under contract to determine the fair market value of the property. The appraiser looks at a variety of factors to determine this amount. Lenders require this service to ensure the property is worth the loan amount.
Separately, counties perform their own appraisals - typically every two years - to determine the value used to assess property taxes. These assessments are more generalized since the county appraiser doesn’t enter the home and inspect in detail. Instead, they are based on comparative sales from the prior two years. To learn more about the La Plata County Assessor’s Office, click here.
What Factors Play into a Comparative Market Analysis?
To prepare a CMA, a RealtorⓇ conducts thorough research. Ideally, the broker can visit the property in person first to gain insights on the condition, finishes, and other amenities that will be taken into consideration. Using the local multiple listing service (MLS), they search for similar active, pending, and recently sold listings. Basic criteria for these searches include age, size, location, bedrooms, bathrooms, acreage, and area. From this, they compile relevant listings and sold prices, and adjust for differences such as location, number of bedrooms and bathrooms, total square feet, views, quality of finishes, layout (such as the floorplan offering the main level primary bedroom, or if the property borders open space), and similar nuances. Through this process, a fair market value range is determined.
Do Buyers Need a Comparative Market Analysis?
CMAs are not as routine for buyers, however they can be very useful when they find a home or property they’re interested in making an offer on, as a way to ensure the offer is aligned with the market.
Comparative market analyses are one of the most common and relevant tools that RealtorsⓇ use and offer. Hiring a real estate agent who is knowledgeable and active in the local market and regularly tracks market trends, adds tremendous value when it comes to accurately pricing your property. While the final listing price is always a seller’s decision, pricing accurately with the help of a CMA is a key factor in successfully selling your Southwest Colorado property. Please don’t hesitate to reach out to The Durango Team at The Wells Group for more information and a comparative analysis on your property.
