Pricing, Valuation, and Market Analysis
CMA vs. appraisal
A CMA is a broker price opinion for marketing and pricing decisions; an appraisal is a licensed valuation for lending, governed by USPAP. Neither "proves" value - value is an opinion supported by evidence.
Three approaches
Sales comparison (residential default), cost (new or unique construction), and income (GRM or cap rate for investment property). Reconcile, weighting the most relevant approach.
The adjustment rule
Adjust the comparable to look like the subject - never the reverse. If the comp is superior, subtract; if inferior, add. Common adjustments: location, GLA, beds/baths, garage, lot, condition, pool, concessions. Adjust dollar amounts, not percentages of price, and derive them from paired sales or market extraction.
Market metrics
Absorption rate and months of inventory: under ~3 months favors sellers, 4–6 is balanced, 7+ favors buyers. Also track days on market, list-to-sale ratio, price reductions, showings per listing, and the "price band" where buyers search.
Worked example: Subject is a 3/2 with no pool. Comp sold at $420,000 with an in-ground pool worth $20,000; the subject has an extra full bath the comp lacks, worth $10,000. Adjusted value: $420,000 − $20,000 + $10,000 = $410,000.
Traps: adjusting the subject; treating price-per-square-foot as a value rule (it shifts with size and price tier); confusing above-grade GLA with finished basement area; ignoring seller concessions buried in the sale price; overpricing to "leave room" and then chasing the market down; forgetting that appraisal bias and fair-housing exposure apply to valuations and to the language you use.