Comparable Market Analysis

Written by Jeremy Horelick
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Performing a comparable market analysis isn't difficult, provided you know what you're doing. For the most part, however, it is certified real estate brokers who conduct CMAs on behalf of their clients. If you're going to pay a realtor to represent your best interests in a land deal, you might as well have that realtor earn his or her commission. Ultimately, you'll have to pay for an appraiser anyway, but an agent can give you a ballpark figure on your property's worth.

To perform a CMA, the subject property--usually one you're buying or selling--is placed side by side with three comp houses that have similar qualities. Choosing sensible comps is one of the most important steps in reaching a fair valuation, which means you'll want to identify homes that have sold in your ZIP code if not on your very street. After that, a breakdown of specific criteria such as views, acres, and bedrooms is necessary so that "adjustments" can then be made.

Making Adjustments in Your Comparable Market Analysis

The next step in your comparable market analysis is to go through each of the criteria you've selected and make adjustments for the differences. Generally, these are made to the comp properties and not the subjects, so if a comp came up one bathroom short of those in your subject house, and that bathroom were estimated at 10,000 dollars, a "plus 10,000" would be listed alongside the bathrooms field under your comp listing. This done step-by-step until each field has been filled for each of the three comparable properties.

The fields you choose for your comparable market analysis are just as important as the comps themselves. Neglecting features like the date of construction or housing style and usage can lead to major disparities in a valuation. Real estate agents who are well practiced at performing CMAs will have an advantage over newcomers since they already understand the methodologies involved. Still, with a bit of practice, novices can figure out the process fairly easily.


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