What is a comparative market analysis?

A comparative market analysis, or CMA, is an assessment of what a property is likely worth by examining sales data for similar homes in the same neighborhood or market area. Ontario residential sales agents use CMAs to help sellers price homes competitively and buyers understand fair market value before making an offer.

The CMA process involves identifying comparable sold listings, often called "comps." These are homes that closed recently (typically within 90 days) and share key characteristics with the subject property: similar square footage, age, lot size, number of bedrooms and bathrooms, condition, and location. The agent adjusts prices up or down based on differences between each comp and the home being analyzed, creating a price range rather than a single value.

A CMA differs from a professional appraisal in important ways. An appraisal is an official valuation ordered by a lender for mortgage purposes and performed by a licensed, independent appraiser. It follows strict standards and becomes a legal document. A CMA is an informal market tool created by an agent for informational use and carries no official weight. CMAs guide pricing strategy; appraisals validate lending decisions.

Because CMAs rely on actual recent sales in the local market, they reflect current conditions and buyer demand more directly than appraisals sometimes do. A home may appraise higher or lower than its CMA suggests, depending on the appraiser's methodology and property-specific factors the lender requires.