Comparative Market Analysis
Definition and meaning of Comparative Market Analysis in real estate.
A comparative market analysis is an informal estimate of a property's value performed by a real estate agent using recently sold, active, and expired listings of similar homes in the area.
In more detail
While similar to a formal appraisal, a comparative market analysis is not legally binding and does not satisfy lender requirements for a mortgage. Agents compile this report by gathering data on comparable properties, often adjusting for differences in features, condition, and square footage. The analysis also looks at expired listings, which can show what prices the market rejected, and pending sales, which indicate current buyer interest.
A well-prepared analysis provides a realistic view of local market conditions and prevents sellers from overpricing their homes. Both buyers and sellers can request this service, which agents often perform as part of their marketing efforts.
Key facts
| Category | Buying & Selling |
|---|---|
| Performed by | Licensed real estate agents or brokers |
| Purpose | Determine listing prices for sellers or competitive offer ranges for buyers |
| Data sources | Recent closed sales, active listings, pending transactions, and expired listings |
A real estate agent prepares a comparative market analysis for a homeowner showing them that similar homes in their neighborhood are selling in a specific price range, helping them set a competitive listing price.
Frequently asked questions
Is a comparative market analysis the same as a home appraisal?
No, a comparative market analysis is an estimate by a real estate agent, whereas an appraisal is a formal, independent valuation performed by a licensed appraiser.
Does a comparative market analysis cost money?
Real estate agents typically provide a comparative market analysis for free to prospective clients as a way to earn their business.