Pricing is the single biggest decision in selling a home. Price too high and the home sits, collecting days on market and eventually price cuts. Price too low and the seller leaves money behind. A comparative market analysis (CMA) is how agents build a supported price range from real market evidence.
Step 1: Document the Subject Property
Record the basics accurately: square footage, bedrooms, bathrooms, lot size, age, condition, updates, and features like a pool or garage. Every comparison depends on this.
Step 2: Choose the Right Comparables
Look for recent sales that are as similar as possible: same neighborhood or a comparable one, similar size, age, style, and condition. Recent sales carry the most weight, because the market can shift quickly.
Step 3: Adjust for Differences
No two homes are identical. Adjust each comparable's price up or down for meaningful differences. If a comp has an extra bathroom the subject lacks, adjust that comp's price down. If the subject has a newer roof, adjust comps without one up. The adjusted prices should cluster into a range.
Step 4: Check the Competition
Sold homes show what buyers paid. Active and pending listings show what buyers are choosing between right now. If similar homes are sitting unsold at a certain price, that's important information too.
Step 5: Read the Market
Months of inventory = Active listings ÷ Average homes sold per month
A lower number generally favors sellers, and a higher number favors buyers. A common rule of thumb treats roughly five to six months as balanced, though agents often read local conditions a little differently. Days on market and list-to-sale price ratios add more context.
A Quick Example
Three recent comps sold for $300,000 (1,500 sq ft), $330,000 (1,650 sq ft), and $360,000 (1,800 sq ft), all at $200 per square foot. That's a useful starting point, but condition, location, and adjustments still decide where the subject home fits. Price per square foot alone doesn't establish value.
A CMA is a pricing and marketing tool, not a formal appraisal.
Build Your CMA
Try the free Interactive CMA Tool, or use the CMA Comparative Market Analysis Worksheet for adjustment grids, active and pending comps, and months-of-inventory calculations. Heading into a listing appointment? See the Listing Presentation Builder.
Written by Marchelle Cook, a Realtor for 26 years and a real estate investor and property manager since 2012. This article is for educational purposes only. A CMA is not an appraisal.
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