The CMA Workflow: 10 Steps – Agents Advantage Real Estate Academy

The office’s CMA standard fits on one page as a sequence of ten steps. The sequence is the standard: each step produces what the next step needs, and a skipped step generally shows up as a gap that the final check is designed to find. The ten steps are stated here as the office issues them, with the product of each.

The ten steps

Step 1. Document the subject. The living area is taken from the best available record (the assessor’s card, the public record, the MLS listing, builder plans or a prior appraisal), with the source noted and any difference between sources noted rather than guessed at; the ANSI Z765 standard, which Fannie Mae requires for an appraisal, is how the appraiser measures and why the appraiser’s figure may differ from the record. Condition and quality are recorded as facts in the same terms used for the comparables, and site, features, permits and anything affecting marketability are recorded from the listing file and an inspection. Product: the subject data sheet, with a source for each fact.

Step 2. Define the competitive market area. The market area is where buyers of the subject would look for an alternative, bounded by where the competing properties are rather than by a radius, with its boundaries inside the town confirmed by data. The comparable search starts in the subject’s own town: a buyer may consider more than one town, but a neighboring town has its own taxes, services and assessment, so its sales reflect that town’s market. The search leaves the town only as the exception, when the property’s buyers would consider only properties of its own kind and the town has no sales of that kind that serve as good substitutes. Product: the market area, stated in a sentence and drawn on a map.

Step 3. Set the timeframe. The search covers sales closed within the past twelve months, the period Fannie Mae’s Selling Guide uses, and the most recent and most proximate similar sales are relied on first, because the most recent sale is the most reflective of the current market. An older sale is used as support, or as the best indicator where that is the case, with the reason stated; when the sales are thin, the search goes back in time, widens within the town, or both, depending on where the better evidence lies. Product: the search window, with the reason for any extension.

Step 4. Select the comparable sales. From the sales within the market area and timeframe, at least three are chosen (the minimum Fannie Mae sets for an appraisal) that compete with the subject on the facts the MLS and public record show: the same property type, similar in style when possible, close to the subject’s size, with a difference beyond roughly 15 to 20 percent treated as a warning sign, similar in condition and site, sold between unrelated parties on the open market. Every sale considered and set aside is listed with the reason. Product: the comparables and the set-aside list.

Step 5. Verify each sale. The terms, concessions, condition and circumstances of each sale are confirmed with the listing agent and the public record. Product: the verification notes, with a source for each.

Step 6. Derive the adjustments. Before any adjustment is entered, the effect on price of any concession, the segment’s market conditions rate, and the amount the market pays for each physical difference are measured from paired sales and extraction. Product: the support page, one figure per difference with its source.

Step 7. Build the grid. The subject is entered once and each comparable beside it, each comparable is adjusted toward the subject on every line the market responds to, and each column is totaled as a net adjustment, a gross adjustment and an adjusted sale price. Bracketing and the size of the corrections are checked. Product: the completed grid.

Step 8. Reconcile the indicators. The adjusted prices are listed with the facts bearing on their reliability, any outlier is investigated, and the most similar sale is weighted most heavily, followed by recency and verification, with the weighting stated in words and figures. Product: the reconciliation and the price range.

Step 9. Position the list price. The pendings are read by list price and days to contract and the actives by list price and days on market, in separate tables; the segment’s months of inventory and trend are computed; and the list price recommendation is placed within the range, generally below the most similar actives and under a search band edge, adjusted for the segment’s inventory and trend, with the reason in a sentence. The checkpoint dates are set. Product: the position sentence and the checkpoints.

Step 10. Run the final quality check. The analysis is read in the order it was built against the office’s checklist, and anything that fails is marked and corrected at the step where it arose before the seller sees it. Product: the completed checklist in the file.

Why the sequence matters

Each product is the input to the next step. The subject’s living area sets the size band in which comparables are selected and the living area adjustment on every column. The market area determines which sales are candidates. The verification determines which recorded prices are market prices. The support page determines what the grid can contain, and the grid determines what the reconciliation can conclude. The range determines where the position can fall, and the final check confirms that the chain is unbroken. An analysis that begins at Step 4 with a search, or at Step 9 with a figure in mind, has to reconstruct the earlier steps afterward, and the reconstruction rarely fits.

Application

A CMA reaches the final check having begun with an MLS search and a price the seller mentioned. The grid is complete and the arithmetic is right, but the subject’s living area carries no source and differs from the MLS figure without a note, two of the sales are from across the parkway, and no sale is listed as set aside. The workflow identifies the missing products: Step 1’s data sheet, Step 2’s market area, Step 4’s set-aside list. The analysis is rebuilt from Step 1, and the top of the range that results is $14,000 below the figure the seller mentioned.

Summary

The office’s CMA is built in ten steps, each producing what the next requires: the subject documented, the market area defined, the timeframe set, the comparables selected with a set-aside list, each sale verified, the adjustments derived from the segment, the grid built and totaled, the indicators reconciled to a range, the list price positioned against the actives and pendings and the segment’s condition, and the final quality check run before the seller sees any of it. The sequence is what makes the analysis explainable.

Downloadable: Sample Completed CMA, a finished CMA for an illustrative property that follows the ten steps and the office pricing standard from subject documentation through the price range and list price recommendation.