In real estate, what does a  comparative market analysis (CMA) mean?  

Regardless if you’re just starting out in real estate or if you’re a seasoned real estate investor, understanding what a comparative market analysis is – and how they are put together – is critical to your success.  

The purpose of this post is to define what a CMA is, how it’s put together, and how you use it to determine the value of a property.  Let’s get started.

Definition of comparative market analysis (CMA)

A comparative market analysis (CMA) is an approach used in real estate to determine the value of a property by considering other similar properties that have recently sold.  

A CMA will include a “subject property” and multiple “comparable properties” also know as “comps.”  

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The subject property is the property you’re doing the CMA for.  Usually, the subject would be a property you’re considering buying, or a property you want to sell.  

The comparable properties are used to help determine the value of the subject property.  I’ll create an example later to help all this make more sense.

Understanding Adjustments in a comparative market analysis (CMA)

A big part of the CMA process is doing adjustments to the comparable properties.  Even the best comps will be different in some ways compared to the subject property, and this is where adjustments come in.

Adjustments are value added or subtracted from the comps to bring them more in line with the characteristics (condition, size, age, etc.) of the subject property.  We’ll look at adjustments in more detail in the next section.

Creating a comparative market analysis (CMA)

It’s likely you’ll have a licensed Realtor run a CMA for you, but it is still important that you understand how they are put together for several reasons:

  1. Even the most experienced real estate professionals can make mistakes, and if your CMA data is inaccurate, you could end up paying too much for a property or price a property too high or too low.
  2. At some point, you may decide to get your real estate license and do your own CMAs.

A CMA will likely be done in MLS.  MLS stands for Multiple Listing Service.  

MLS provides detailed information on past and present properties that are either active (listed for sale) or have been active sometime in the past.  Real estate agents primarily use MLS to list properties for sale and to conduct market analysis.  MLS is only accessible to licensed real estate agents and brokers.

So, let’s walk through the various steps to creating a CMA in MLS.  

Disclaimer: the data on the following screenshots is tiny.  You may need to zoom in.

Step #1: Entering details on subject property

There are various fields in MLS to describe the subject property.  You’ll see from the screenshot below, I’ve entered the following:

  • address
  • bedroom count
  • bathroom count
  • square footage
  • year built

comparative market analysis


Step #2: Identify The Comparable properties (comps)

Here’s the criteria I used to pull three comps for our subject property:

  • sold within the last six months
  • located within one mile of subject property
  • four bedrooms max
  • two bathrooms max
  • 2,000 sq. ft. max
  • built between 1950-1990



The criteria you or your real estate agent use may differ somewhat than what I’ve used here depending on the property and the market.  

For instance, there may be a number of comps that sold more recently than six months, or your subject property may be located in the country with the closest comps being five miles away.  

Step #3 Apply Adjustments

Now that we’ve identified our comps, it’s time to apply our adjustments.  

Note: adjustments are only made to comps; you never apply adjustments to the subject property.

I won’t dive into all three comps, but let’s just look at the comp on Crestview street.  

You’ll see from the screenshot below that I’ve applied three adjustments: one for square footage, one for # of bedrooms, and one for an attached single car garage.  

Let’s take a closer look at each of these adjustments.

comparable market analysis


Square footage adjustment

Our subject property has 1,440 sq. ft., and our Crestview street comp has 1,248 sq. ft. Obviously our subject property is 192 sq. ft. bigger than the Crestview street comp.  

As a result, we need to add value to the Crestview street comp to adjust for the difference in square footage.  

Why are we adding value?  Well, since our comp is 192 sq. ft. smaller than our subject, we are going to add 192 sq. ft. in value to bring our comp more in line with our subject property’s square footage.  Here’s the formula I used to do that:

$79 (comp’s sold price/sq. ft.) x 192 =  $15,168.

Here’s how I calculated the sold price per sq. ft.  

$102,000 (sold price) – $3,300 (seller concessions) / 1,248 sq. ft. = $79 (rounded)

Here’s a screenshot from MLS where I pulled the sold price and seller concessions information from:

comparative market analysis 6

What are seller concessions?  This is money the seller brings to the table at closing to be applied toward the buyer’s prepaid items such as an appraisal, property inspection, etc.

Bedroom adjustment

Our subject property has three bedrooms, and our comp only has two bedrooms.  I’m valuing a bedroom in this area at $10,000, so I added a $10,000 bedroom adjustment to our comp.

Garage adjustment

Our subject property has a two-car garage, and our comp only has a single-car garage, so I added $4,000 to the comp.

If you’re curious how I know what a bedroom is worth, or what a garage stall is worth, it’s simply based on experience.  

As a new real estate agent, you’ll have a real estate broker, with at least several years of experience, that you can lean on for help.  

Step #4 review the results

We can see the sold price for each of our three comps, the total amount of adjustments, and the adjusted price.  The adjusted price is calculated by subtracting the total amount of adjustments from the sold price.  


Step #5: consider the recommended list price

Our final step is reviewing the low, high, and recommended list price for our subject property.  

At this point, we can make a data-driven decision as to how much we should either offer for a property or how much we should list a property for.

comparable market analysis cma


In summary, CMA stands for comparative market analysis.  CMAs are used to determine the value of a property by considering what other similar properties have recently sold for.  I’ve defined what a CMA is, how you put one together, and how the data will help you make an informed decision on what a property is worth.  

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