What is a comparative market analysis (CMA)?

What is a comparative market analysis (CMA)?

• A. A broker's estimate of a property's value based on recent sales of similar properties.
• B. An appraisal performed by a certified appraiser using the cost approach.
• C. A lender's evaluation of loan approval risk.
• D. The closing disclosure showing credits and debits.

Answer: (A)

A CMA is a broker's estimate of a property's value based on recent sales of similar properties in the area. Real estate professionals pull data from recent sales, active and pending listings, and market trends, then adjust for differences in size, condition, features, lot size, and location to suggest a competitive listing price or to evaluate an offer. It’s a market-based estimate designed to help buyers and sellers price a home, not a formal valuation. Unlike a formal appraisal, which is done by a licensed appraiser using standardized methods and is often required by lenders to determine loan value, a CMA is informal and prepared by the broker for guidance. The other options describe things outside of valuation: a lender’s evaluation of loan risk and the closing disclosure used in the settlement process.

A CMA is a broker's estimate of a property's value based on recent sales of similar properties in the area. Real estate professionals pull data from recent sales, active and pending listings, and market trends, then adjust for differences in size, condition, features, lot size, and location to suggest a competitive listing price or to evaluate an offer. It’s a market-based estimate designed to help buyers and sellers price a home, not a formal valuation.

Unlike a formal appraisal, which is done by a licensed appraiser using standardized methods and is often required by lenders to determine loan value, a CMA is informal and prepared by the broker for guidance. The other options describe things outside of valuation: a lender’s evaluation of loan risk and the closing disclosure used in the settlement process.