The Insider

Of the many tools and techniques a successful real estate agent must possess, the Comparative Market Analysis (CMA) remains key.

An examination of “comparable” properties — typically those that have sold — CMAs are used by real estate agents to determine the price to list a home (or the price to offer for a home that may be on the market).

To understand CMAs and their role in the real estate marketing lifecycle, we sat down with Maxwell Rabin, Vice President at TTR Sotheby’s International Realty.

First, what is a CMA?

A Comparative Market Analysis (CMA) is a process that helps determine the valuation of a property by comparing it to similar properties in the same area that have recently sold. An effective CMA will consider similar properties to your subject property and then normalize the comparable properties based on specific criteria and data points, adding consideration for unique attributes of the property that either add or detract from its value.

How do you prepare CMAs?

First, you have to have a reliable source of data from which to reference. I almost always use the MLS, which, for real estate professionals, offers comprehensive data on properties both on and off the market. 

Next, you need to determine your primary data point. For me, it’s price per square foot. While most properties include bedrooms and bathrooms and list prices and sales prices, normalizing your CMA around one data point is helpful.

Then, you have to look at the type of property you are analyzing. Is this a condo in the middle of city center or a sprawling estate in the countryside? Typically, the more comparable properties you have (meaning, the more types of properties that have sold that are of similar makeup of your subject property) the more parity there will be in pricing. 

In the case of a condo in city center, chances are that there are many sales and comparable listings to analyze, so pricing becomes more focused on location, the floors, amenities, etc. 

For a sprawling country estate, on the other hand — where the price point is higher and there are fewer sales to compare to on a relative basis — it can be more difficult. 

In every case, I have a boilerplate template that gets customized based on the nuances of the subject property and the market. 

What is the most important metric or data point in a CMA? 

Personally, I use Price per Square Foot with the advertised square footage that the agent provides in the listing. If advertised square footage is not available, I will then defer to the tax records. As an example, if I the subject property is a tear down or a new build, you won’t have tax records so you will have to defer to the advertised square footage.

When do you present a CMA to a client?

There’s no better time to present a CMA than during your listing presentation. Ideally, going into this conversation with your prospective client, you will have already done your homework on the subject property and can use the CMA to help seal the deal. In many ways, the preparation of a CMA is table stakes for having a productive conversation with a potential client, and presents an opportunity to deliver value from the start.

Can you give us an example of how you would prepare a CMA for a condo? 

Sure, so as I mentioned I have a boilerplate template which has certain criteria and data points mapped out. The first process is to enter the basic information of your subject property, including beds, baths, and price..

Next, I’ll add in specific unique qualities of the subject property, such as HOA fees, parking, and location (corner, basement, etc.).

Finally, I’ll add in my own curated knowledge of the area or neighborhood as well as the comparable sold listings from the past year or so.

For example, I may know that one comparable property has amazing views, so there is a bit of an edge there – or, I know that even though the subject property and the comparable properties are in the same condo building, the subject property on floor 2 has a better layout than floor 6 (even though each has two bedrooms, two bathrooms, and the same square footage).

Once we have everything mapped out, we will focus on one or two properties as the primary comparables to the subject property. 

In the case of a price adjustment, how would you approach the conversation? Can you use a CMA to help inform a new price?

Absolutely. Just recently in Capitol Hill, I had a listing that was simply not selling despite a very healthy market where a lot of inventory was moving fast. When I took over the listing, I knew upfront the listing was likely over-priced, but I had to prove this to my seller client before putting it back on the market.

To help sell the price adjustment, I put together a CMA including all sold listings from the past year as well as all new comparable listings that were coming on the market. The baseline was to look at sold properties, all of which were indeed coming in lower than our original list price. Then, we looked at what’s coming on the market and provided updates weekly so we understood the velocity of new sales and the price point that buyers were gravitating towards.  

In the case of this property, the listing was in a fantastic location in a hot neighborhood, but had no parking and no basement — despite being priced almost identically to properties which had both of these key features. In this case, lowering the price turned out to be the right move and we ultimately sold the property, but this wouldn’t have happened if I was not able to present data in an easy and digestible manner. 

In what other cases would a CMA be helpful?

In Washington, D.C., we work with real estate developers who purchase row homes, subdivide and renovate them to be sold as condos. In this case, we often prepare CMAs so the property developer — in this case, our client — can understand in-out costs and so they can manage expectations on how lucrative the project may be.

For a real estate developer, in the context, it’s helpful to know of similar projects in the neighborhood and the acquisition costs for the original properties, as well as the list and sale price for the new renovated units that will eventually hit the market.

If you as the real estate developer know you have to hit a certain profit margin for the project, but have an ambitious renovation ahead of you that may not make you whole, it’s better to know that before you start the project rather than after. A CMA helps.

How do you discuss Zestimates when introducing your CMA?

This is something we’ve dealt with many times.

In the case of a seller wanting to list her house at the Zestimate price — in which case, the Zestimate was high, in our opinion — we simply go back to the CMA.

In this case, we will take the subject property and compare it to the Zestimates of comparable sold listings as well as their actual sales price on a cost per square foot basis.

 In this case, we are trying to educate our client — not necessarily that a Zestimate is bad, but that it may not reflect the reality of the marketplace.

In this case, the Zestimates of the sold comparable properties were around 10% higher than the actual sold data. In an alternate reality, you can imagine acquiescing to the owner’s wishes and listing at the Zestimate price, but then — because it was priced too high — having to make concessions via price improvements.

About Maxwell Rabin

Maxwell Rabin began his real estate career in 2000 working as a sales associate at TTR Sotheby’s International Realty. Now an associate broker, Maxwell has grown his business alongside the founder of the firm, Jonathan Taylor — their team is perennially ranked among the highest producing in Washington, D.C..

Maxwell has facilitated hundreds of transactions, covering every type of residential property, including: large single-family homes, historic properties, condominiums and cooperatives, multi-family buildings, new construction, as well as several commercial real estate transactions.

A native Washingtonian, Mr. Rabin grew up in Chevy Chase and was a member of the Adams Morgan community for 11 years. Currently, Maxwell resides in Georgetown.

A graduate of the Duke Ellington School of the Arts in Washington, D.C., and later of the famed Berklee College of Music in Boston, Maxwell is also an accomplished guitarist and music instructor with a specialization in jazz performance and composition.

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TTR Sotheby’s International Realty is a licensed real estate brokerage in Washington, D.C., Maryland, and Virginia.