Real Estate Investing

Comparative Market Analysis in Real Estate Using Comparables 

April 15, 2024

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A Guide To Comparative Market Analysis In Real Estate

Whether you’re interested in buying or selling an investment property, it is often difficult to know exactly how much a property is worth.  

That’s where Comparative Market Analysis (CMA) comes into play. Using similar properties that have been sold recently in an area, called comparatives or comps, CMAs can help both parties in a real estate transaction understand and reliably estimate the fair market value of the home. 

In this article, we’ll discuss the key components of a CMA report, the role of comparables, and the main differences between a CMA and an appraisal. We’ll also provide some strategies and considerations for formulating and interpreting a listing price. 

What is a Comparative Market Analysis (CMA)? 

A Comparative Market Analysis (CMA) is a real estate tool used to estimate a property’s value or price based on similar homes that have been sold recently in the area.   

CMAs are used most often by real estate agents and brokers, but a DIY CMA report can also be done independently by potential buyers. 

With a CMA, price is not calculated based on the value of the home’s individual components combined. Rather, the value of a home is what someone will pay for it – which is why it’s key to look at similar properties in the area. 

CMA Report Components 

A CMA report can be obtained through a real estate agent or broker. Since CMAs are just estimates of a property’s price, there is no standardized form they must take. However, most CMAs include the following: 

  • The address and basic information of the property 
  • The addresses of up to five comparables (which we’ll discuss further in the next section) 
  • Each property’s main features, such as the number of bedrooms, square footage, type of property, etc. 
  • The sales price of each comparable 
  • The price per square foot of each comparable 
  • A price range for the target property 

Importance of Real Estate Comparables in a CMA 

Real estate comparables, often shortened to comps, play a crucial role in a CMA. Sellers utilize comps to set accurate listing prices, while buyers reference them to ensure they’re not overpaying. 

Comps are also critical outside of CMAs: Appraisers rely on comps for precise home valuations, and real estate agents use them to create comprehensive market analyses. 

A comparable should be as similar as possible to the target property in: 

  • Size (square footage). Zillow recommends finding comps that are within around 300 square feet of the target property. 
  • Condition. Choose comps that have similar renovations and were built around the same time.  
  • Location. Ideally, comps should be in the same neighborhood or within a half-mile from the target property. 
  • Number of bedrooms and bathrooms. Choose comps with the same number of bedrooms and bathrooms as the target property. 
  • Main features. If the target property has a pool, deck, proximity to a lake, or other valuable features, the comps should also. This will ensure an apples-to-apples comparison. 

When choosing comps, common areas and built-ins can also greatly impact the accuracy of your price estimate. A built-in is any item that does not leave the property and is part of the permanent structure of a home. This includes permanent appliances, cabinets, and furniture that is built into the home, like built in shelves, benches, storage space, garages, and other attached items. High quality built-ins can increase a property’s selling price, and even ones that look high-quality can convince a buyer to pay more for the property. When conducting a CMA, it’s important to look at all aspects of the property that could lead to a higher price point, including built-ins. 

Tips for Identifying Real Estate Comps 

To find real estate comps effectively, start by hiring an agent or conducting independent research. Agents utilize MLS for accurate comparable sales data, while additional resources like public records and Zillow can also be beneficial. By combining MLS comps with online data and insights from agents, you can formulate a listing price that reflects the market accurately. 

Specifically, Zillow’s pricing tool can be helpful to identify comps, considering factors such as location, size, condition, and nearby amenities. Aim to find at least three similar homes meeting your specific criteria. 

CMA vs. Appraisal 

Now that you understand what a CMA is and its dependence on good comps, how do CMAs differ from other property evaluation techniques, like appraisal? 

CMAs are estimates of a home’s market value performed by real estate agents, sellers, buyers, or brokers. Real estate agents and brokers may have tried-and-true methodologies for conducting a CMA, but a DIY approach is also possible. 

On the other hand, appraisals must be completed by a licensed and certified appraiser. Thus, appraisals are much more exact in looking at a property’s value. Professional appraisers also look at comparables, but they also include local housing market conditions and evaluate each aspect of a property in-depth. 

CMAs and appraisals are based on the same factors. The key distinction has to do with price vs. value. CMAs estimate a property’s price, which is what buyers will probably pay for it; appraisals estimate a property’s value, or what it is worth. 

When to use a CMA vs. an appraisal?  

CMAs are appropriate for sellers considering what to list their home for and buyers who need an idea of competitive counteroffers to use to negotiate the price down. 

Appraisals, meanwhile, are often required by lenders before a homebuyer or investor can be approved for financing. They are also needed for flippers before they re-list after renovating and are required during the actual sales process to ensure that both parties are getting a fair deal. 

Note that appraisals might also be a better option in rural markets where properties aren’t likely to be sold very often. In this case you’ll have a hard time finding comparables, so a formal appraisal will give you a better estimate of the property’s worth. 

Steps to Conduct a Comparative Market Analysis 

New investors should strongly consider hiring a real estate agent or broker to conduct their first CMA, as the process can be complex. It’s easy to make rookie mistakes and take shortcuts, such as doubling prices solely based on size differences.  

Here are the general steps for a CMA:

1. Identify and list key properties of the target home

Start with the property you’re interested in buying or selling. What are this property’s key features? List all features and aspects involved in its value, including its size, condition, age, location, number of bedrooms and bathrooms, square footage, and features. Features could include anything that might contribute added value, such as a laundry room, dining room, family room, entertainment centers, built in shelving, custom drawers, or other features.

2. Identify the neighborhood or local market boundaries

Before you can identify comps, it is necessary to define the boundaries of your neighborhood or local market. This will ensure you choose comps that are in in a sufficiently similar location and have about the same access to local amenities, walkability scores, etc.   

3. Choose 3-5 comparables and list their features

You’ll want to organize this data in a chart that is easy to read and interpret. Here’s an example of what your comp chart could look like: 

  Target Property  Comp 1  Comp 2  Comp 3  Comp 4   
Price sold    $330,000  $345,000  $315,000  $322,000   
Date of sale    4 months ago  6 months ago  2 months ago  Last month   
Age  1988  1987  1988  1983  1990   
Condition  Average  Average  Above average  Average  Good   
# of Bedrooms  3  3  4  2  3   
# of Bathrooms  1.5  1.5  2  1  1.5   
Total square footage  1,700 sq. ft.  2,000 sq. ft.  2,200 sq. ft.  1,300 sq. ft.  1,900 sq. ft.   
Lot size  1.5 acres  2 acres  1 acre  .5 acres  1.5 acres   
Garage  2-car  2-car  2-car  1-car  2-car   
Exterior amenities  Pool; firepit  Pool  Pool; firepit  None  Firepit   
Interior amenities  Finished basement, new cabinets  Finished basement  New cabinets  Unfinished basement  Finished basement, new cabinets   
Other features                

 4. Determine the value of each feature

For each of the features listed above, you will need to assign an approximate value. This can be done by asking a contractor to review the homes and break down the estimated costs of each bedroom, bathroom, square foot, lot acre, exterior feature, etc.  

5. Make any necessary adjustments

Once you have approximate vales for each feature in your local market, the next step is to adjust the sales prices of your comps to reflect the differences between those properties and your target property. Adjustments are made to account for differences between comparable properties. For instance, if each additional 300 square feet is determined to be equivalent to $12,000, you would need to subtract $12,000 from Comp #1’s price since your target property has 300 fewer square feet. After you’ve made such adjustments for every property, you should be left with an adjusted price for each comp. These prices represent the range that the current property could fall between.  

6. Calculate price per square foot

Take each adjusted price and divide them by their respective square footages. The result will be an estimate of three to five possible prices per square foot.  

7. Calculate the target property’s price estimate

The last step in a CMA is to average the above prices per square foot that you calculated. Then, multiply this number by your target property’s square footage to get the final price estimate.  

Tips for Formulating Your Listing Price 

Using multiple data points throughout the CMA process will help you estimate price more accurately. For instance, you could utilize MLS comps along with online data and insights from agents to establish a well-informed price range. Cross-reference your desired price and CMA price with your home’s Zestimate for additional perspective. Be sure to keep detailed records of promising comps for future reference. 

Additionally, don’t forget to adjust for seasonality. While Zestimate can be a starting point, it’s not a substitute for a CMA report or a professional appraisal.  


Understanding the importance of real estate comparables and how they impact pricing decisions is crucial for both sellers and buyers in the competitive market. 

By utilizing Comparative Market Analysis, you can confidently navigate the complexities of pricing strategies and make informed decisions when setting listing prices or making offers. 


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