Competitive Market Analysis (CMA)

The Competitive Market Analysis

The Competitive Market Analysis is sometimes caled the Comparative Market Analysis. For commercial properties, it's called the Broker Price Opinion (BPO). This is a tool that real estate agents use to determine the market value of a property. The CMA is done differently from the BPO so we are only going to concentrate on the CMA.

The Setup

Let's say your house is a 1,600 square foot ranch house in the Wow Factor subdivision. It has a two-car garage, three bedrooms and two full baths upstairs. It has a partial walk-out basement with a half bath and all the space there is finished. The finished square footage downstairs adds another 800 square feet.

How It's Done

Let's say you call Sally Sellum to ask about your home's value. She pulls a list of similar houses that have sold in the last 90 days in your subdivision or MLS area and finds three other ranch homes. They are all a little different in square footage, amenities, age, etc. Sally uses only houses that have closed and not those that are currently on the market or are pending. She doesn't use the houses that are on the market now because they probably won't sell for the asking price. Using these numbers will inflate the estimate. She can't use pending houses because the final price is confidential until closing.

Using numbers from the real estate industry and the National Association of Homebuilders, Sally puts together a side-by-side comparison of the homes and makes adjustments for the differences. Sally is looking at items like finished square footage, type of siding, fireplaces, fencing, decks, updated kitchens and baths, etc. These adjustments are added to or subtracted from the final sales price. Averaging the sales prices will give you an idea of the approximate market value of your home.

Why the Numbers May Be Different From Your Tax Valuation

Appraisers don't look in houses so they sometimes don't know about additional square footage from newly finished basements, additional baths, etc. They each have a different way of figuring value. Around here, they see how sale prices are trending and adjust last year's estimate. If house prices are trending up, your valuation might go up.

Numbers will vary from agent to agent, as well. They can use different houses, different time frames (say, 6 months out), or different adjustments. A CMA is an estimate, after all.

Why Would You Do a CMA

Even if you are not looking to sell your house, there are a couple of legitimate reasons to do a CMA. You will want to know the approximate market value of your home so you know if you have enough insurance on it. You can also use a CMA to protest property valuations. And last, you can use a CMA to calculate your net worth.

Give Us a Call

We can do a CMA, no charge. We can tell you what the market value of your house is. If you're looking to sell or refinance, this will give you an idea of what your house is worth.