CRS Market Analysis and Comparative Market Analysis (CMA) 1 — Questions and Answers
Question 1: What is a Comparative Market Analysis (CMA) and what is its primary purpose?
- A government appraisal required by law before every sale
- An agent-prepared analysis using recent comparable sales to estimate a property's market value (Correct answer)
- A lender's assessment of the borrower's ability to repay a mortgage
- A title company report comparing ownership histories of similar properties
Correct answer: An agent-prepared analysis using recent comparable sales to estimate a property's market value
A CMA uses recently sold, active, and expired comparable properties to help sellers price accurately or buyers determine a fair offer price.
Question 2: In a CMA, what does a 'pending' listing indicate?
- The listing has expired without a sale
- A property is under contract but has not yet closed (Correct answer)
- The seller has temporarily withdrawn the property from the market
- The listing agent has reduced the price recently
Correct answer: A property is under contract but has not yet closed
Pending sales reflect accepted offers and provide the most current signal of where the market is heading, though they can't be relied upon as closed comparables until final sale prices are available.
Question 3: What is the primary criteria for selecting comparable sales in a residential CMA?
- Properties in the same state with similar listing agent history
- Properties that are similar in size, age, condition, features, and location, sold recently (Correct answer)
- Only properties listed by the same brokerage
- Properties with the highest sale prices to maximize the seller's pricing position
Correct answer: Properties that are similar in size, age, condition, features, and location, sold recently
Comps must mirror the subject property in key physical and locational attributes to produce a meaningful and defensible market value estimate.
Question 4: What does 'days on market' (DOM) indicate in a CMA analysis?
- The number of days the listing agent has held the listing
- How long a property took to go under contract, indicating demand and pricing accuracy (Correct answer)
- The number of showings the property received before selling
- The seller's flexibility on closing date based on time on market
Correct answer: How long a property took to go under contract, indicating demand and pricing accuracy
High DOM can signal overpricing or buyer hesitation; low DOM suggests strong demand, helping agents advise sellers on competitive pricing strategy.
Question 5: What adjustment is typically made in a CMA when a comparable property has a garage and the subject property does not?
- Increase the comparable's sale price by the garage value to adjust upward
- Deduct the estimated value of the garage from the comparable's sale price (Correct answer)
- No adjustment is needed for features like garages
- Double the value of the garage and add it to the subject property's price
Correct answer: Deduct the estimated value of the garage from the comparable's sale price
When a comparable has a feature the subject lacks, its sale price is reduced by that feature's estimated value to arrive at an adjusted price more reflective of the subject property.
Question 6: What does 'absorption rate' measure in a real estate market analysis?
- The rate at which moisture is absorbed by a home's foundation materials
- How quickly available homes are being sold in a given market over a specific period (Correct answer)
- The percentage of buyers who obtain financing after applying
- The rate at which a property depreciates relative to neighborhood averages
Correct answer: How quickly available homes are being sold in a given market over a specific period
Absorption rate = homes sold per month / total homes available; it tells agents whether the market favors buyers or sellers and helps set realistic pricing and timeline expectations.
CRS Market Analysis and Comparative Market Analysis (CMA) 1
What is a Comparative Market Analysis (CMA) and what is its primary purpose?