Market Analysis and Comparative Market Analysis (CMA) Flashcards

What market condition exists when there is less than 3 months of housing inventory available?

Answer: A seller's market

Less than three months of supply favors sellers because demand exceeds available homes, often resulting in multiple offers, price appreciation, and faster sales.

What is a 'months of supply' calculation in real estate market analysis?

Answer: The number of months it would take to sell all current listings at the current sales pace

Months of supply = active listings / monthly sales rate; it is the standard metric for determining whether a market is a buyer's, seller's, or balanced market.

What is the difference between an appraisal and a CMA?

Answer: An appraisal is prepared by a licensed appraiser for lending purposes; a CMA is an agent's market-based value opinion

Appraisals are formal, regulated valuations prepared by licensed appraisers that lenders rely upon for mortgage underwriting; CMAs are agent market opinions used for pricing strategy.

Which trend in a CMA suggests a property is priced too high?

Answer: High DOM, listing price reductions, and expired listings in the comparable set

A pattern of high DOM, price reductions, and expired listings among comps signals market resistance to those price levels, indicating the subject may be overpriced.

What does 'price per square foot' help a CRS agent analyze in a CMA?

Answer: A normalized unit of comparison to evaluate how the subject property's price aligns with similar homes

Price per square foot normalizes comparisons across different-sized homes, helping agents identify whether a property is priced above, at, or below the local market rate.

In a rapidly appreciating market, why should an agent give more weight to recent sales versus those from 6 months ago?

Answer: Recent sales more accurately reflect current buyer demand and pricing; older sales may undervalue the property in a rising market

In an appreciating market, older sales understate current value; using the most recent comparables ensures the pricing recommendation reflects actual market conditions.