The Office CMA Standard – Agents Advantage Real Estate Academy

Section objectives

Upon completion of this section, the student will be able to: state what a CMA prepared under the office’s license consists of and why the standard it meets is set by the broker; identify where a CMA departs from the evidence and the consequence each departure produces for a listing; define a competitive market area and establish one for a subject property; set the sales timeframe and use listing status correctly as evidence or as position; document a subject property, including gross living area taken from the best available record with its source noted, and explain the ANSI standard the appraiser uses to measure it; select comparable sales on the basis of competition for the same buyer, and state the requirements Fannie Mae places on a comparable sale; verify a sale before relying on it; and apply an orderly method when true comparables are not available.

Every listing an office takes carries a price, and behind the price is a comparative market analysis that an agent prepared. Under a broker’s license, that analysis is the office’s professional statement of the range within which the property should sell. Whoever prepares it, the standard it meets belongs to the broker, because the brokerage is the party the seller has engaged and the party whose name is on the listing. This section sets that standard, item by item, in the order the work is done. The office standard is a professional standard, not a requirement of Connecticut law. Several of its elements come from Fannie Mae, whose Selling Guide governs the appraisal on most financed sales, and they are identified as Fannie Mae’s where they appear: at least three closed comparable sales, the twelve-month timeframe for those sales, and the ANSI Z765 standard the appraiser uses to measure gross living area. The rest is the professional discipline this course teaches, adopted for brokerage pricing because the CMA prepares the listing for the appraisal it is likely to meet on a financed sale.

A comparative market analysis is a market-based pricing analysis. It is grounded in closed sales of properties that competed with the subject for the same buyers; it applies judgment to the differences between those sales and the subject; and it produces a price range within which the listing is positioned. The market establishes what a property is worth, through what buyers pay for it and for the properties that compete with it. The CMA reads that market and states the range. It does not state a value, and it is not presented as one.

What a CMA is not

A seller often arrives with another figure already in mind, and each such figure is reached by a different route. A Connecticut tax assessment is set at seventy percent of the town’s estimate of market value as of its most recent revaluation, which may be several years old, by a mass method applied to every property in town at once. An automated estimate from a consumer website generally does not reflect the kitchen renovated last year, the twenty-five-year-old roof, or the commercial lot behind the fence. A figure the seller needs or hopes for is a fact about the seller, not about the market. Each can be acknowledged; none is ordinarily an input to the range.

What the standard requires

A complete CMA prepared to the office standard contains the following: a stated competitive market area, established from where the subject’s buyer would look; a sales timeframe of the past twelve months, the period Fannie Mae’s guidance uses, with the most recent and most proximate similar sales relied on first and any older sale explained; a subject record with gross living area from the best available record, with the source noted, condition recorded as facts, and site factors recorded in both directions; at least three closed comparable sales (the minimum Fannie Mae sets for an appraisal), each chosen because a buyer of the subject would have considered it as an alternative, each meeting the requirements a sale is held to on a financed transaction, and each verified before it is relied upon; active and pending listings shown to position the list price within the range, not as evidence of value; and, where true comparables were not available, a record of how the search was extended and why.

Each item answers a question that a seller, a buyer’s agent, or a lender’s process may ask: where the sales came from, whether they describe today’s market, what exactly is being priced, whether the range rests on what buyers paid rather than on what sellers asked, whether each price reflects a typical transaction, and why any sale from farther away or longer ago was used. The subject record carries particular weight: a size figure from the wrong source shifts every comparison in the same direction.

Why the standard is the broker’s and not each agent’s is a matter of what a CMA does in a transaction. It sets the seller’s expectation from the first conversation. It strongly influences whether the listing draws buyers in its first two weeks or sits. It is the document a seller produces when asked why a property was priced as it was, and it is the document a broker is asked about when a listing expires or a transaction fails to close. An office in which every CMA meets the same standard can answer those questions consistently.

How it applies. The standard above is a checklist, worked through item by item before the listing appointment, and it takes a few minutes. A CMA that meets it can go to a seller. One that does not is ordinarily completed first: the missing item is identified and supplied before the range is presented.

Consider a CMA prepared for a 1,750-square-foot cape on a half-acre lot. It shows four sales and a range of $489,000 to $509,000, and it has three gaps. No market area is stated, and the highest sale, a 2,100-square-foot colonial at $512,000, sits in a subdivision across the state highway where houses of that kind sell in a higher range. The subject is recorded at 2,150 square feet, the figure from its last MLS listing, which included 400 square feet of finished lower level; the assessor’s record, the best available record for the area above grade, shows 1,750 square feet. One sale closed nine months ago with nothing said about the market since.

With the market area stated as the subdivision and the streets between the highway and the brook, the colonial is set aside, and a 1,700-square-foot cape that closed in the same subdivision two months ago at $468,000 takes its place. With the subject compared at 1,750 square feet rather than 2,150, the upward size adjustments that had been applied to every sale fall away. The nine-month-old sale is retained with a note that sales in the subject’s segment over the period show a stable market. The supported range becomes $462,000 to $478,000. The difference, $27,000 at the bottom and $31,000 at the top, separates a listing that enters the market where buyers are paying from one that enters above it.