What is the purpose of a comparative market analysis in real estate?

A comparative market analysis (CMA) is primarily used to determine a property's worth by comparing it with similar properties that have recently sold in the same area. This process involves analyzing various factors, including the sale prices of comparable properties, their features, and the current market conditions, to arrive at a value that accurately reflects what a buyer would reasonably pay for the property. By utilizing data from comparable sales, the CMA provides a basis for pricing the property in accordance with market trends, making it an essential tool for agents and sellers when assessing and setting a listing price.

While assessing a property's tax assessment value is related to understanding its worth, this is not the primary purpose of a CMA, as tax assessments are typically conducted by government entities rather than through market comparisons. Identifying potential buyers is also not a direct function of a CMA, as the analysis focuses on property value rather than buyer demographics. Finally, calculating potential rental income pertains more to income-producing properties and is not the main goal of a CMA, which is centered around the determination of market value through comparison with similar properties that have sold.