How To Do a CMA – Step-By-Step For Real Estate Agents

Creating a CMA or “Comparative Market Analysis” is one of the first things a real estate agent should be able to do. Whether you’re working with a buyer, seller, or renter, knowing the property value is essential to get a deal under contract. But with so much information available today it can be difficult to know exactly what should be included or not. I’ve created thousands of comparative market analyses since 2008. In today’s post, I’m going to share exactly how to do a CMA.

What is a CMA in Real Estate?

CMA stands for “comparative market analysis. Sometimes you’ll also hear it referred to as a “competitive market analysis”. It involves finding similar properties to the one you’re trying to sell and comparing their estimated home value to your property in order to determine a valuation for a home that hasn’t been sold yet.

The comparative market analysis, which is determined by the real estate agent, is a crucial part of real estate that helps the buyers, sellers, and the agents themselves.

For prospective buyers, it helps them determine whether or not the asking price is fair. Using comparative market analysis, real estate agents can inform their clients if the subject property asking price is above or below the current market price.

For prospective sellers, the CMA will help them decide on a fair listing price, along with the guidance of their agent. Lastly, for the buyer or listing agent, the comparative market analysis helps them to be fully prepared to answer all of their clients’ pricing questions.

What’s Included In A Comprehensive CMA?

Everyone has a different comparative market analysis process unique to them. We each use different programs, tools, and systems to research, reach an estimate and explain that estimate to the client. Below are the programs that I use in the order in which I use them.

1) Zillow Zestimate

I realize a lot of you are probably cringing right now at the very thought that I would even look at Zillow. With a one-star rating out of five in terms of accuracy in many states, who could blame you. But hear me out. Your client, whether they are a potential buyer or seller, have Zillow at their fingertips. Many of them believe Zillow is the authority on all things real estate.

You need to be aware of what the Zestimate for the subject property is so you can explain to your clients its accuracy or inaccuracy. If you don’t address the Zestimate and explain that Zillow is not privy to sold real estate market data (in most states) the client may not believe your analysis.

2) Realtor’s Property Resource (RPR)

The RPR system is free to real estate agents; you’ll just need to put in your NRDS number to prove you’re a certified real estate agent to get access. (If you don’t have access, there’s a list of alternatives at the end.) You’ll use this as a value comparison, much like the Zestimate.

Creating A Quick CMA – When I’m in a pinch and need to come up with a quick CMA, I’ll typically turn to the RPR app. With this app, I can input the subject property and within seconds have a fairly accurate valuation. RPR gives an accuracy rating which should still be taken with a grain of salt. However, so long I’d give proper disclosure to my client that this valuation was automated and that I’d manually create one as soon as I had time, it worked great!

3) Tax Records

So, as you probably already know, the tax records aren’t going to give you the fair market value of the home; like the Zestimate and RPR listings you’ve gathered, the tax records are just another piece to your CMA puzzle. If you don’t have a good idea of where to start, this along with the Zestimate and RPR will help you get a starting price range. If you’re a San Antonio real estate agent like me, the tax records will usually be about 90% of the market value of the home. Typically, market value tends to be about 5-10% higher than the taxed value.

4) MLS (Multiple Listing Service)

Now, here’s where we really get started calculating the comparative market analysis. Your MLS, also known as the multiple listing service, will be your best friend when it comes to CMA research. The MLS will show you what recent sales have taken place in the subject properties area. With these recent sales, you can create an accurate report based on real data.

Someone giving a thumbs up in front of a street sign

CMA Rules of Thumb

  1. Square feet: When you’re searching for properties in your MLS, I recommend setting the square feet filter to within +/- 10% of your subject property’s square footage.
  2. Age: You want to set the filter for the age of the home within +/- 5 years of the age of your subject property.
  3. Neighborhood: I typically try to stay within the same neighborhood as my subject property, but sometimes that just doesn’t yield enough results. I recommend extending this to within a half-mile to a mile radius from the neighborhood of your subject property. If that’s necessary, however, I recommend making sure the other filters are tight to ensure you have as closely similar a property as possible.
  4. Kind of home: Is it a family home, townhouse, ranch, duplex, or something else? Setting a filter for this will help you get closer comparable listings.
  5. Beds and baths: You can also place the total beds/baths in the filters. For instances of half bathrooms, you can toggle this filter to round down or up as is necessary. For example, if your subject property has 2.5 baths, you can widen your search to homes with anywhere from 2 to 3 baths.
  6. Garage: What type of garage does the home have, if any? Was it built onto the house initially or has it been added recently?
  7. Stories: Does the home have more than one story or even a bonus room? Applying this filter could help you narrow down your comparable sales if you’re getting too many.
  8. Pool: This is a rarity in CMAs, but if your subject property has a pool, it’s necessary to account for it when determining the value.
  9. Construction state: Was the home just recently built or has it been owned before? Was it renovated recently? Was it once a rental home or has it always been a sale property? This will help you consider necessary factors in determining the comparative market analysis.
  10. Listing age: I like to set my listings filter to 6 months in my MLS; this ensures that the market hasn’t changed much since the comp was sold for that sales price. However, if you need to widen your search, I recommend starting at 12 months and not exceeding 24, but do keep in mind that the market could have increased or decreased a slight percentage over the course of that time.
  11. Acreage: I don’t often include the acreage in my analysis, but I find that for homes in the country or with a lot of property, it can be helpful in locating more closely related comparable listings.

How Many Comparables Should I Be Looking For?

I typically try to keep my range of comparables between 5 and 10. If it exceeds 10, I know I need to tighten up on my filters a little bit so I can be sure to find the closest matching property, but if it’s less than 5, I really need to widen up those filters.

Widening Your Search

When I have to widen my search, I typically find doing it in this order yields the best results:

  1. Square Feet
  2. Age
  3. Listing age (start with 6, then 12, then 24)
  4. Location (2 miles, 4 miles, 5 miles)
A laptop with a graph and pie chart

How to Do a CMA – “Easy” Property

Let’s start with the simplest, cookie-cutter example: your average home in a standard neighborhood.

Step One: Getting the Zestimate and Checking RPR

I start this process with two tabs open: my subject property and a blank search. From the blank search, I’ll start with Zillow. Keep in mind that even if the property isn’t listed yet, you can still get the Zestimate. From there, I open my RPR search in a new tab and do the same thing. I will leave these two tabs open for the remainder of the process.

Step Two: Heading To Your MLS

Your MLS is the meat and potatoes of your search; it’s where you’re going to find all your comparables. Here’s where we start to get into the filters we talked about above. Keep in mind, most MLS systems can save preset filters to help simplify your search process.

You also want to be sure you’re keeping an eye on the number of comparables the whole time (you want it between 5 and 10 results, but to start keeping it closer to 10 is helpful), so you know immediately if you should broaden or tighten your search.

  1. Copy the subdivision/neighborhood name
  2. Add in square footage range
  3. Put in the year built range
  4. Add in the number of beds/baths (I recommend not worrying with half baths to start)
  5. Add the number of stories the home has
  6. Choose whether it’s newly constructed or pre-owned
  7. Choose whether it has a pool or not
Someone typing on a laptop

Step Three: Analyzing Your Comparables

On your list of properties, you’ll probably see a variety of “available,” “active option,” and “sold” properties. “Active option” means that that the sale is pending. From here, you’ll want to look at the CMA Summary. This helps you see the average selling price per square foot of the comparables you’ve found. If you’d like, you can filter out active listings from sold property to give a different average in the CMA summary.

Step Four: Using the CMA Summary

You’ll want to compare the price per square foot of the subject property with that of the comparables. Note that if the square footage of a property is higher, the price per square foot will go down. Now, take the price per square foot and multiply it by the total number of square feet for both your subject property and each of the comps. Compare these with the price you see on the Zestimate and the RPR. This will help you come up with the best price estimation to quote for your CMA.

How To Do A CMA – Difficult Properties

Not every potential client has the cookie-cutter example house, however. The process for finding the comparative market analysis for these types of properties is largely the same, but you may have to go through a bit more tweaking on your filters.

Remodeled Houses

If the house has been newly renovated, you want to make sure that you specify that in your MLS search because it greatly affects the home’s value in comparison with properties that are newly constructed or have just had a few upgrades over time. You want to look closely at the images of comparable property to ensure that it’s the same level of nice to make an accurate comparison.

Fixer Upper

Fixer-upper homes are a special category all their own. It can be quite a process to determine what fixes are mandatory after a home inspection. You want to take extra care to determine if there are any problems with the structural integrity of the home.

There are three stages of fixer-upper homes:

  1. Very Nice
  2. Average
  3. Not Nice (needs work)

You’ll start your CMA process much the same way, but you’ll want to keep in mind that RPR and Zillow won’t be aware of structural integrity issues. This is something you’ll need to talk to the homeowner about and consult with the MLS for, then factor into your CMA estimate. For this type of home, you’ll really have to rely on the images provided for the comparables to make sure they’re the same level of niceness.

A house under renovations

Rural Areas

If a property is in a rural area, you may have a hard time finding a suitable comparable home as the factors vary more greatly; you’ll want to be more flexible with your filters. Another problem you might run into with these types of properties is a large acreage in an average subdivision. If you’re faced with this problem, try dropping the acreage filter to get a better feel for the value of the house itself.

Additional CMA Tools

If you don’t have access to RPR, don’t worry; all hope is not lost. There are a few programs you can subscribe to that will offer the same thing, sometimes more. Here are my top 3 favorites:

Cloud CMA

Cloud CMA costs about $35 a month to subscribe. It will make the CMA for you as well as create a sample real estate listing presentation for you that you can show your potential client on your iPad. Works with most MLS systems.

House Canary

House Canary is a little bit more expensive at $54 per month. It limits you to just 10 CMAs a month too. While it’s a quality program, I think Cloud CMA would be a better option if it will work with your MLS.

Toolkit CMA

This is the cheapest option at $190 annually and it works with most MLS systems.

What To Bring To Your Listing Presentation

I usually do all of the CMA research and calculations I can before I ever go for that initial meeting with my client. I find that I can figure out most of the information I need from a phone call with them, a little research, and utilizing Google Street View, if necessary. Once I’ve gathered all my information, I email my client with copies of the Zestimate, the RPR report, tax reports, and MLS reports. Then, I text or call them to let them know that I’ve done that and would like for them to look over those documents before I come by the property.

This way, when I get to the property, I can focus on the issues at hand. I can walk my client through the CMA and discuss potential areas where it can be changed. I also bring my iPad, rather than a bunch of printed-out papers, because it allows me to be fluid in the information I share with them. You want to make sure that you understand your client before jumping to this, though, as some are uncomfortable with all the technology.

A man holding a briefcase and newspaper

After Your Presentation

During the presentation, I’m being sure to take lots of notes so I don’t forget anything in the whole meeting. Then, when the meeting’s over, I email them a follow-up with all the details of our meeting; I find that clients prefer this as it gives them something tangible to remember.

You’ll also have to be prepared to sell your CMA to the client. You’ll need to explain clearly why you arrived at the number you did, how and why it might differ from the number they had in mind, and suggest an adequate pricing strategy.

Comparative Market Analysis FAQ

I’ve been asked so many questions from clients and fellow real estate agents about CMAs, but the two I get asked most often are:

Client: Is This A Fair Value?

You’re taking your clients around to your carefully selected properties, just trying to get a good feel for the type of home they could see themselves living in and they ask about the fairness of the list price. You’re understandably frustrated; after all, that step comes later. Here’s how I recommend handling this delicate situation.

Answer: I can’t possibly know off the top of my head, but when I get back to the office I’ll do a CMA and share with you all the information so we can discuss it and make an informed decision together. It wouldn’t be fair to you for me to just quote an estimate off the top of my head without doing any of the research. What we’re doing here is narrowing down your list based on homes you see yourself living in, then we’ll deal with the values.

Analysis: They usually find this to be a satisfactory answer as it proves that I’m honest and willing to do the work to provide them with the most accurate information, while also being willing to discuss their options with them and not just make a decision for them.

Agent: How Do I Calculate A CMA?

We’ll get into greater detail with this in the latter half of this article, but there’s a simple answer to this too.

Answer: Thanks to technology, we don’t have to do CMAs entirely in our heads anymore. Apps and programs found online help a lot when it comes to calculating your comparative market analysis. One of the most important programs at your disposal is your MLS (multiple listing service), which will be your best friend when it comes to creating a CMA report.

Client: Is A CMA The Same Thing As An Appraisal?

Answer: No. An appraisal is performed by a licensed appraiser. Typically an appraisal costs hundreds of dollars and is completed after there is a contract on the property. A CMA is a real estate agent’s best estimate of the market value whereas an appraisal is the appraiser’s best estimate of the market value.

Kyle Handy

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  1. You should probably visit the home before you try and create an evaluation of price. Also don't take other peoples word for square footage, you don't want to get sued.

      1. I don’t always go with the tax records as they are sometimes wrong. Especially, if the home is older and there have been additions made. But yes, I’d start with the tax records if no other info is available. I’d also ask the seller for the most recent appraisal they have as that should have the correct sqft.

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