What Is Comparative Market Analysis
A Comparative Market Analysis, or CMA, is a report that compares your property to similar properties that recently sold in your area. In property tax assessment appeals, a CMA serves as evidence that your assessed value is too high relative to what comparable properties actually sold for on the open market.
The key difference between a CMA and a formal appraisal is that a CMA is typically prepared by a real estate agent and is less rigorous than an appraisal report prepared by a licensed appraiser. However, in many jurisdictions, a well-documented CMA is admissible at Board of Review hearings and can effectively challenge an inflated assessment.
CMA in Property Tax Assessment Appeals
Your county or municipality uses an assessment ratio to determine how much of a property's market value becomes the taxable assessed value. For example, if your jurisdiction's assessment ratio is 50%, a property worth $400,000 would be assessed at $200,000. A CMA helps prove what your actual market value really is, which directly impacts your assessment.
When you file an appeal, the assessor will have used their own methodology to arrive at your property's value. A CMA provides independent evidence of market value based on actual sales, not the assessor's data or formulas. Properties within 10% of your property's price per square foot, sold within the last 6 months in your neighborhood, carry the most weight in a CMA.
How to Use a CMA in Your Appeal
- Gather comparable sales: Collect at least 3 to 5 properties that are truly comparable in size, condition, age, and location. Public records, MLS data, and county assessor records are your sources.
- Document adjustments: Note price adjustments for differences like square footage, garage spaces, lot size, or property condition. Most jurisdictions expect adjustments of 5% to 15% per feature.
- Calculate market value: Use the adjusted comparable sales to estimate a defensible market value for your property. This becomes your target assessed value divided by the assessment ratio.
- Prepare for the hearing: Bring the CMA and supporting documents to your Board of Review hearing. Be ready to explain why each comparable property is similar to yours and how you arrived at your value estimate.
CMA vs. Formal Appraisal
A CMA uses the sales comparison approach, the same method licensed appraisers use. The difference is that an appraisal includes the cost approach and income approach as well, making it more comprehensive. An appraisal also carries more legal weight in some jurisdictions and costs $400 to $800. A CMA prepared by an agent is often free or costs $100 to $300, making it accessible if you cannot afford a full appraisal.
Many homeowners start with a CMA and file an appeal with it. If the Board of Review dismisses your argument, a formal appraisal becomes your next step for a higher court challenge.
Common Questions
- Can I use a CMA prepared by my real estate agent at a Board of Review hearing? Yes, in most jurisdictions. However, it must be thorough, well-documented, and based on verifiable comparable sales. Some boards require the CMA preparer to be present or sworn in to testify.
- How far back should my comparable sales be? Sales within 6 months are most credible. Sales up to 12 months old are acceptable if your market is slow. Older sales weaken your argument because market conditions change.
- What if there are no truly comparable properties in my neighborhood? Expand your search radius to similar neighborhoods with comparable zoning, school districts, and amenities. Document why you selected properties outside your immediate area. This is especially common in rural or specialized properties.