CRS Market Analysis and Comparative Market Analysis (CMA) 2 — Questions and Answers
Question 1: What market condition exists when there is less than 3 months of housing inventory available?
- A buyer's market
- A seller's market (Correct answer)
- A balanced market
- A stagnant market
Correct 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.
Question 2: What is a 'months of supply' calculation in real estate market analysis?
- The number of months since the last property in the area sold
- The number of months it would take to sell all current listings at the current sales pace (Correct answer)
- The projected rental income in months needed to cover the purchase price
- The listing agent's average months to close a transaction
Correct 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.
Question 3: What is the difference between an appraisal and a CMA?
- An appraisal is informal; a CMA is legally binding
- An appraisal is prepared by a licensed appraiser for lending purposes; a CMA is an agent's market-based value opinion (Correct answer)
- Both are identical in methodology and legal standing
- A CMA is required by law; an appraisal is optional
Correct 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.
Question 4: Which trend in a CMA suggests a property is priced too high?
- Multiple offers received within the first week
- High DOM, listing price reductions, and expired listings in the comparable set (Correct answer)
- Absorption rate above 30% per month
- Comparable sales clustering above the subject's list price
Correct 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.
Question 5: What does 'price per square foot' help a CRS agent analyze in a CMA?
- The seller's equity position relative to market averages
- A normalized unit of comparison to evaluate how the subject property's price aligns with similar homes (Correct answer)
- The exact maximum offer a buyer should submit
- The property's eligible loan amount based on lender guidelines
Correct 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.
Question 6: In a rapidly appreciating market, why should an agent give more weight to recent sales versus those from 6 months ago?
- MLS rules require sales under 90 days to be weighted higher
- Recent sales more accurately reflect current buyer demand and pricing; older sales may undervalue the property in a rising market (Correct answer)
- Lenders only accept comparables from the last 30 days
- Expired listings are excluded from all CMAs by law
Correct 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.
CRS Market Analysis and Comparative Market Analysis (CMA) 2
What market condition exists when there is less than 3 months of housing inventory available?