Comparative Market Analysis Spreadsheet
Download REI Grove's comparative market analysis spreadsheet to compare a reference property against nearby comps, track property details, and estimate a more informed rent or sale price.
Key Takeaways
- A comparative market analysis can help real estate investors estimate a fair rent or sale price by comparing a target property to similar nearby properties.
- REI Grove's CMA spreadsheet is organized around a reference property, comparable properties, pricing, rental income, property features, links, notes, and calculated metrics.
- Investors should compare properties by location, status, sale or list price, rent, unit count, square footage, and other relevant features.
- By using this spreadsheet, you can organize market research more clearly and make more informed pricing decisions for rental or sale properties.
Real Estate Comparative Market Analysis
Real estate investing is a complex industry with many factors in local and national markets that affect your return on your investment. One of your top concerns as a real estate investor is pricing—if you price your property too low, you don't get as much return; if you price it too high, you won't have much interest in the property. How do you know what the right price is?
Using a comparative market analysis tool can help you determine the perfect rent or selling price for your investment properties. While real estate agents or brokers can assist you with this, it's important for you to also conduct research on the property and surrounding market using similar properties called "comparables."
In this article, we'll break down the main components of a comparative market analysis using comps, as well as its two main use cases in residential real estate. If you're ready to start your own comparative market analysis (CMA), you can download a copy of our real estate CMA spreadsheet above.
Comparative Market Analysis Spreadsheet at a Glance
| Spreadsheet Section | What It Tracks | Why It Matters |
|---|---|---|
| Section 1: Reference Property | The target property being priced or evaluated. | Gives investors a baseline property to compare against comps. |
| Section 2: Comparable Properties | Up to five comparable properties. | Lets investors compare similar properties side by side. |
| Section 3: Pricing and Status | List price, sold status, purchased date, and estimated current value. | Helps investors evaluate market value and sales context. |
| Section 4: Rental Income and Unit Details | Monthly rent and number of units. | Supports rental pricing and income comparison. |
| Section 5: Property Features | Rooms, beds, baths, lot size, square footage, parking, and renovation status. | Helps investors compare property quality and appeal. |
| Section 6: Links and Notes | Property links and notes. | Keeps sources and important observations organized. |
| Section 7: Calculated Metrics | Price per square foot, price per unit, annual appreciation, and 1% rule. | Adds quick financial comparison points for deeper analysis. |
What is a Comparative Market Analysis?
A comparative market analysis (CMA) is a method used by a real estate professional to determine the fair market value (or rent price) of a property. CMAs estimate this value by comparing a target property to similar properties that have recently been sold in the area or are currently listed for sale on the market. These similar properties are called "comparables" or "comps," and most analyses include at least three.
CMAs consider a variety of factors related to the target property and its comps to estimate a reasonable price range. These factors often include property size, location, age, condition, features, renovations, and others. They are often conducted by a real estate agent, who collects data about and analyzes the comparable properties.
Unlike a formal appraisal, which is conducted by a licensed appraiser, a CMA is a less formal analysis and doesn't typically involve calculating the exact value of individual components of the property. However, CMAs are nonetheless a critical tool for understanding current market trends, in part because of their accessibility.
Conducting your own comparative market analysis, or CMA, requires research and time, but the payoff is well worth it. You'll need to know or estimate detailed market information, like the price per square foot of your property and its comps and the desirability or appreciation potential of the neighborhood. While pricing can be difficult for even seasoned real estate investors, it's especially tricky for those without experience in the business. That's why conducting an analysis following a comparative market analysis template is invaluable.
When is a Comparative Market Analysis Used?
CMAs are primarily used for two purposes:
(1) To determine the approximate market value of a home that is being listed for sale, and
(2) To determine an appropriate rent price for a property being rented out to tenants.
Let's look briefly at both use cases.
Using a CMA to Determine Market Value
Determining the listing price for a property for sale is perhaps the most common use case of CMAs. An experienced real estate agent typically performs CMAs to help sellers set a competitive listing price or assist buyers in making informed offers. Investors also use CMAs to collect data for their market pricing decisions.
A good CMA in each of these scenarios should include at least three recently sold homes as comps, located as close to the target property as possible. Ideally, these comps should have sold within the last three to six months. For each comp, the agent or investor will then carefully document and/or itemize the differences between them and assign a corresponding value to individual features (e.g., an additional bedroom corresponds to an $X increase in listing price in this market). They may also calculate the price per square foot or per unit if the properties are different sizes.
If the analysis focuses or emphasizes active listings and current market competition, rather than just recent sales, it may be referred to as a competitive market analysis.
Using a CMA to Determine Rent Price
Setting rent price is a crucial skill for any landlord. There are many factors that drive rent prices up or down—some of these factors are "hidden" or are due to factors that are not immediately obvious, like a large company in the neighborhood suddenly requiring employees to return to the office and driving up demand, or a microeconomic downturn from an event like a factory closure which would lower the interest in that area.
Using comps is an invaluable tool in these situations. By analyzing comparative rental properties that have signed leases within the last 30 days, you can see how competitive or accurate your rent price is.
When choosing comps for your rental property, be sure to compare properties that not only have a similar number of bedrooms and bathrooms as yours, but also that have comparable amenities. Your analysis won't be as accurate if your property doesn't offer the same luxury amenities like pools, laundry services, parking, or gyms.
It's also a good idea to choose comps that have similar policies and applicable fees, when possible. Does your property boast any included utilities? If your subject property includes water and gas, try to find comps that do the same. Are renters asked to pay extra for things like pets or parking? Your comps should reflect similar benefits or charges to create the most accurate CMA. This may require some extensive research on listing sites.
When choosing a rent price based off comps, a good practice may be putting yourself in the shoes of a potential renter— when faced with two similar apartments, one with amenities and one without, renters will likely expect lower rent prices from the apartment without those luxury add-ons.
What Does the Real Estate CMA Spreadsheet Cover?
REI Grove's comparative market analysis spreadsheet is designed to help investors compare a reference property against multiple comparable properties. The spreadsheet gives investors space to record property details, pricing information, rental income, physical characteristics, renovation status, links, notes, and key calculated metrics.
Section 1: Reference Property
The reference property is the target property being analyzed. This may be a rental property you already own, a property you are considering buying, a property you plan to sell, or a property you want to price for rent.
Section 2: Comparable Properties
The spreadsheet includes space for multiple comparable properties. These comps give investors a side-by-side way to compare the reference property to similar properties in the same market.
This section may include:
- Comparable 1
- Comparable 2
- Comparable 3
- Comparable 4
- Comparable 5
For the strongest analysis, investors should choose comps that are similar in location, size, condition, number of units, number of bedrooms and bathrooms, amenities, and market timing.
Section 3: Pricing and Status
Pricing and status fields help investors understand whether each property is currently listed, sold, or otherwise being evaluated. These details matter because active listings and recently sold properties may tell different stories about market demand.
Section 4: Rental Income and Unit Details
Rental income and unit details are especially important when the CMA is being used to estimate rent or evaluate an income-producing property.
Section 5: Property Features
Property features help investors compare whether the reference property and comps are truly similar. Differences in size, layout, parking, and renovation status can all affect pricing.
Section 6: Links and Notes
The spreadsheet includes space for property links and notes. This allows you to save the listing or data source they used, along with any observations that may affect the analysis.
Section 7: Calculated Metrics
The spreadsheet includes calculated comparison metrics that can help investors evaluate properties more efficiently. These numbers do not replace deeper analysis, but they can make differences between properties easier to see.
These metrics include:
- Price per square foot
- Price per unit
- Annual appreciation
- 1% rule
Conclusion
Avoiding bad investments is a vital skill in the real estate investing space. While it's inevitable that you will endure bad decisions occasionally, conducting your own research and being prepared in this process will help you negate many of those risks.
Using a real estate comparative market analysis tool can help you practice skills that are transferrable to many different investing strategies. For example, you may need these exact same comparative skills when pricing a flipped property or selling a condo.
You can start your own comparative market analysis by downloading a copy of REI Grove's CMA spreadsheet above.
FAQs
What is a comparative market analysis?
A comparative market analysis, or CMA, is a method for estimating a property's fair market value or rent price by comparing it to similar nearby properties.
What are comps in real estate?
Comps, or comparables, are similar properties used to evaluate the target property's price, rent, or market position.
How many comps should a CMA include?
Most comparative market analyses include at least three comparable properties, though more comps can provide a broader market view.
What does REI Grove's real estate CMA spreadsheet include?
The spreadsheet includes a reference property, up to five comparable properties, address, list price, status, purchase date, estimated value, and more.
What is the difference between a CMA and an appraisal?
A CMA is a less formal pricing analysis, often completed by an agent, broker, or investor. An appraisal is a formal valuation completed by a licensed appraiser.
Can a CMA help determine rent price?
Yes. A CMA can help landlords estimate rent by comparing the property to similar rentals with recent lease activity, and similar policies or fees.
Can a CMA help determine sale price?
Yes. A CMA can help estimate sale price by comparing the target property to recently sold homes or active listings in the same area.
What property details should investors compare?
Investors should compare location, property size, age, condition, renovations, bedrooms, bathrooms, rental income, and sale or list price.
What calculated metrics does the spreadsheet include?
The spreadsheet includes price per square foot, price per unit, annual appreciation, and the 1% rule.