What’s a CMA & Should a Real Estate Agent Create One?

Every real estate agent has been there: a seller lead who wants to list their home, but at a price far higher than is realistic. Turning the lead away risks losing the potential sale. But agreeing to sell at an inflated price? That’s even worse. Weeks go by with no offers, advertising costs pile up, and the seller’s frustration grows. Before you know it, you’ve wasted valuable time, money, and possibly your reputation. This is where a CMA (Comparative Market Analysis) comes in. By presenting a data-backed valuation, you guide sellers toward realistic expectations and pave the way fora faster close. In this post, we’ll break down what a CMA is and show you how to create one in 5 simple steps to win more listings and close more deals. Let’s go!

What does CMA Mean in Real Estate?

A Comparative Market Analysis (CMA) is a tool in real estate for estimating a property's value. It’s created by analyzing recently sold properties that are similar in size, style, and location—commonly referred to as "comparables" or "comps." A well-prepared CMA will include basic information about the property being assessed alongside the details of comparable properties. This data allows clients to see trends, such as the average price per square foot, and helps to set realistic expectations for pricing and negotiating. Realtors will use CMAs in two main situations:

• Seller leads. A real estate agent will use a CMA to determine a listing price that will sell in the current market.
• Buyer leads. A real estate agent will use a CMA to help a buyer make an informed offer on a property they want to buy.

For seller leads, a CMA is more than just a pricing tool. It's a way to validate your gut feeling and guide sellers toward an informed listing price. This is key for getting a property that’s likely to sell in the current market.

CMA vs Appraisal

A Comparative Market Analysis (CMA) and an appraisal both estimate a property's value. So, aren’t they the same thing? Not quite. An appraisal is a formal evaluation conducted by a state-licensed and certified appraiser. Appraisals are required by mortgage lenders to verify a property's value before approving a loan for a buyer. The appraised value is critical in determining the loan amount a buyer can secure. On the other hand, a CMA is an informal valuation that doesn’t require a license (aside from your state-specific licenses required to be a real estate agent.) Experienced real estate professionals should be able to get close to the appraisal value of a property by conducting a CMA. Achieving this means serious buyers should find it easier to get a mortgage. But a CMA and an appraisal are still very separate things.

6 Core Benefits of a CMA

To recap, here are 5 core benefits of using CMAs as a real estate agent:

• No Licensing Required: Real estate agents and brokers can create CMAs without needing an official license, making it a flexible and accessible tool.
• Set the Right Listing Price: CMAs help sellers establish a price that attracts buyers—competitive enough to sell quickly without leaving sellers at a loss.
• Guide Buyers in Making Offers: Agents use CMAs to help buyers craft competitive offers and ensure they’re paying a fair, informed price for a property.
• Streamline the Closing Process: A well-prepared CMA ensures the listing price aligns closely with the final appraisal, making the sale smoother for both agent and client.
• Build Trust and Credibility: A CMA demonstrates your expertise and market knowledge, helping you establish trust and authority with clients during negotiations.
• Gain Deeper Market Understanding: By analyzing comparable properties, agents can better understand local market trends, demand, and competition, making them more effective and informed advisors.

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How to Create a Comparative Marketing Analysis (CMA) Report in 5 Steps

1. Evaluate the Property & Neighborhood

The first step in creating a CMA is to understand the property and its surrounding neighborhood. Start by considering any neighborhood amenities that might influence the property’s value, such as:

• Proximity to Parks: Green spaces and recreational areas nearby.
• High-Quality Schools: Access to top-rated public or private schools.
• Restaurants and Cafés: Popular dining and social spots within walking distance.
• Shopping and Entertainment: Nearby malls, theaters, or boutique stores.
• Public Transit Access: Close proximity to bus stops, subway stations, or commuter rails.
• Community Features: Shared amenities like pools, clubhouses, or playgrounds.
• Walkability: Sidewalks and paths that make the area pedestrian-friendly.
• Street Appeal: Tree-lined streets and well-maintained surroundings.
• Safety and Security: Low crime rates and visible neighborhood security measures.
• HOA Benefits: Additional features like landscaping, private gyms, or exclusive community perks.

Assess the overall condition and character of the neighborhood. Look at elements such as sidewalks, tree-lined streets, and the upkeep of neighboring homes—these factors contribute to the perception of the area and can sway buyers.

2. Find Comparable Houses (“Comps”)

The next step in creating a CMA is to find at least three comparable properties. These are called "comps." They should be homes that have sold recently—ideally within the past three to six months—and share similar characteristics with the property you’re pricing. Drawing from the evaluation work you did in Step 1, such as assessing neighborhood amenities and property features, will make it easier to identify the best comps. Once the comps are selected, you’ll create a detailed list of features and characteristics for comparison such as:

• Location: Proximity to the property, ideally within one mile and the same school district.
• Lot Size: The overall land area of the property.
• Square Footage: The size of the home’s interior living space.
• Age and Condition: The home’s age and its current state of repair or renovation.
• Number of Bedrooms and Bathrooms: Core features buyers often prioritize.
• Layout and Style: Design features like Cape Cod, ranch, or colonial styles.
• Finishes: Quality of interior materials and upgrades, such as countertops and flooring.
• Yard Size and Features: Landscaping, patios, or other outdoor elements.
• Heating and Cooling Systems: Modern HVAC systems versus older setups.
• Extra Amenities: Pools, fireplaces, garages, or finished basements.
• Upgrades: Solar panels, remodeled kitchens, or other significant improvements.
• Sales Price: The final sale amount for the property.
• Adjusted Sales Price: Adjustments for differences between the property and its comps.
• Price per Square Foot: A calculated metric to aid comparisons.

In some cases, finding suitable comps can be challenging. Rural areas or low-volume markets may have fewer recent sales. If this happens, you can expand your search criteria:

• Increase the timeframe to include properties sold within the last nine months to a year.
• Broaden the search radius beyond one mile.
• Look for comps in similar areas with comparable amenities or school districts.

Additionally, online real estate platforms like Realtor.com can be a useful resource for finding potential comps.

3. Calculate Adjustments

The next step is to adjust your comp’s prices to account for differences between them and the property you’re listing. This step ensures a fair "apples-to-apples" comparison. Here’s how it works in simple terms:

• Understand the Concept of Adjustments Adjustments are made by comparing specific features of each comp with the subject property (the home you're listing). If a comp has a superior feature—like an extra bedroom—you subtract the value of that feature from the comp’s price. Conversely, if the comp has an inferior feature—like no garage—you add the value of that feature to the comp’s price. This process helps you zero in on a realistic and competitive price for your listing.
• Assign Values to Differences To calculate adjustments, assign a dollar value to each difference in features. For instance:
  • A bedroom might be valued at $10,000.
  • A garage might add $15,000 to the price.
  • A finished basement might be worth $20,000.

These values can be based on market research or by consulting with a contractor for specific cost estimates.

• Make Adjustments Let’s look at an example:
  • Let’s say the comp has 3 bedrooms, but the subject property has 2 bedrooms. Since the extra bedroom is a superior feature, you subtract the value of one bedroom (e.g., $10,000) from the comp’s price.
  • Another comp doesn’t have a garage, while the subject property does. The garage is an inferior feature for the comp, so you add the value of a garage (e.g., $15,000) to the comp’s price.

You keep going through all the features until you arrive at a final, adjusted price for each comp.

• Account for Concessions If the comp’s sale included seller concessions—like paying for the buyer’s closing costs or making repairs—subtract the value of those concessions from the comp’s price (if you can find this information out). This ensures the final price reflects the property’s actual market value.

By carefully adjusting for differences, real estate agents can ensure their CMA is both realistic and competitive, giving sellers confidence in their pricing strategy. Below is an example of making adjustments on three comps.

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4. Determine the Price per Square Foot

Next, calculate the price per square foot for each comp. Do this by dividing the adjusted price by the home’s square footage. Next, find the average price per square foot by adding up the prices per square foot of all the comps and dividing by the number of comps. Finally, multiply this average by the square footage of the subject property to estimate its price.

5. Create and Share Your Report

It’s time to organize and present your Comparative Market Analysis in a clear, professional format. While there’s no universal template for a CMA, including the following elements ensures your report is thorough and easy for clients to understand:

• Property Details: The address and key features of the subject property (e.g., elevation, floor plan, number of bedrooms and bathrooms).
• Comparable Properties: A list of three to five comps with their addresses and descriptions.
• Square Footage: The size of each property, including the subject property.
• Sales Price: The original sales price of each comp.
• Dollar Adjustments: Adjusted values based on differences in features.
• Adjusted Price Per Square Foot: The calculated adjusted price per square foot for each comp.
• Suggested Price Range: A reasonable price range for the subject property based on your analysis.

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What Do You Do if a Seller Doesn’t Like Your CMA?

Despite your best efforts, professionalism, and solid research, some sellers will still insist on pricing their property far above market value. It’s frustrating. But it happens to everyone. Many agents face the tough choice of whether to list the property anyway, risking wasted time and resources, or to walk away entirely, potentially losing a deal. But it doesn’t have to be the end of the road. Here are three strategies to help you navigate this situation.

1. Suggest a Trial Period at Their Price

Compromise by agreeing to list the property at their desired price—but only for a limited time. Explain that if the property doesn’t generate significant interest or offers within 10-14 days (or similar) the price should be reassessed and adjusted to align with market value. This strategy gives the seller the chance to test the waters while still leaving room for you to pivot to a more realistic price. It also positions you as a flexible yet professional partner who’s willing to meet them halfway.

2. Convince with Comparative Analysis

If sellers are over-optimistic, a second CMA can help. Instead of focusing solely on their property, show them what buyers can get for their desired price in the same neighborhood. Highlight larger homes, better amenities, or superior upgrades in those higher-priced comps. Visualizing the gap between their property and others in the same price range often makes sellers reconsider. It reinforces your expertise and helps them understand why their initial price might not work. But on logic, rather than emotion.

3. Walk Away (And List a Better Property)

Not every deal is worth taking. Listing a property far above market value can harm your reputation and waste valuable resources. Sometimes, the best option is to walk away. So how can you do this without losing out? The key to confidently declining unrealistic listings is having a steady flow of new seller leads. Visit our catalog of high-performing real estate postcards here. That’s where tools like Ballpoint Marketing’s real estate direct mail postcards come in. Ballpoint Marketing’s real estate postcards use real pen-written messages, not printed “handwritten” fonts, to create an authentic, personal connection that builds trust with potential sellers. Tested over three years in competitive markets, our approach consistently delivers response rates of 1-1.5%, outperforming traditional direct mail methods. This leads to more inquiries and more seller leads. By consistently generating these leads, you can cherry-pick the best opportunities and avoid compromising your time and reputation. This lets you focus on listings that align with market reality—and close more successful deals.