The comparative market analysis, residential market analysis, and pricing a property

From market evidence to an asking price

A comparative market analysis (CMA) is a licensee's opinion of a property's likely price range, developed from comparable properties and current market conditions. It is not an appraisal, and a licensee must never call it one. A seller uses it to choose an asking price; a buyer can use it to evaluate an offer. The asking price is a marketing decision, while the eventual sale price is the amount buyer and seller agree upon.

Build a relevant comparison

Inspect the subject and verify its location, property type, size, condition, layout, lot, amenities, and ownership form. Select properties that compete for the same buyers. Recent nearby closed sales with similar characteristics usually provide stronger evidence than distant, dissimilar properties. Check sale dates, concessions, and unusual circumstances rather than accepting a recorded price at face value.

Closed sales show completed transactions. Active listings show present competition and sellers' expectations. Pending listings indicate current activity, but their final prices may not yet be known. Expired and withdrawn listings help identify unsuccessful marketing; investigate price, condition, exposure, and seller circumstances before drawing conclusions.

Adjust, then reconcile

Adjust comparable sale prices toward the subject: subtract for a comparable's superior feature and add for an inferior feature. Use market-supported contributions, not the owner's renovation bills. For example, a comparable sold for $500,000 and has a garage worth $20,000 more than the subject's parking arrangement. Subtract $20,000 to obtain an adjusted indication of $480,000. Weigh the most relevant, reliable comparisons more heavily instead of mechanically averaging every price.

Read the residential market

Examine competing inventory, sales pace, days on market, price reductions, financing conditions, and local supply and demand. Months of supply equals active inventory divided by average monthly sales: 24 competing listings divided by 6 sales per month equals 4 months. Define a consistent market segment and measurement period. Falling inventory and faster sales can support stronger pricing; rising inventory and slower sales may call for a more competitive position.

Recommend a supported range, explain the evidence, and discuss the seller's timing and goals. A seller's mortgage balance or desired proceeds do not establish market value. Monitor buyer response and new comparable sales after listing, then revisit the strategy.

New York appraisal distinctions

New York Executive Law § 160-a distinguishes state licensed and state certified real estate appraisers and defines their credentials. Under Executive Law § 160-x, public perception of an appraiser as a disinterested third party can make the work an appraisal assignment even if the client calls it specialized services.