Comparative market analysis
A comparative market analysis is a real estate licensee's pricing study of a property against what has sold and what is listed nearby, a trade term that no Virginia Code section or Real Estate Board regulation defines.
No Virginia definition, and the word the Code uses instead
Search the Virginia Code chapter on real estate brokers and salespersons, the Real Estate Board's regulations and the Real Estate Appraiser Board's regulations, and the phrase comparative market analysis is not defined in any of them. It is a name the trade uses, not a term of Virginia law.
What the Code does have is a word for the thing itself. The appraiser chapter exempts a licensed real estate broker or salesperson who, "in the ordinary course of business, provides a valuation or analysis of real estate for a fee", and the section just before it defines a valuation as an estimate of value.
So the nearest the Code comes to the phrase is a valuation or analysis. The limits the same exemption puts on that valuation, and what they mean when an owner or a lender wants to use the number, are argued in the answer on whether a valuation is an appraisal.
Appraisers meet a parallel line from the other direction. The Appraiser Board's regulations let an appraiser provide market analysis studies or consulting reports that are not appraisals of market value, provided each one carries a conspicuous statement saying it is not an appraisal.
Because no Virginia rule defines the study, two analyses of the same tract can be built from different sales and different listings. Reading a listing's record means knowing what each field measures, including how the MLS counts time on the market. Ground bought for the income it produces raises a separate pricing question, taken up in what a cap rate is. An owner testing an asking price against recorded sales and the county assessment can start with how to tell whether land is overpriced.
On this site the number that comes back from a request is called an opinion of value, with the reasoning written beside it.
Why the 2010 federal Guidelines turn a market analysis away as an evaluation
Where a lender's regulator does not require an appraisal on a real estate-related financial transaction, Virginia's Code names the opinion of market value that may be used instead: an evaluation. The 2010 Interagency Appraisal and Evaluation Guidelines address whether a market analysis can serve that role, under their own name for it: competitive market analysis.
Likewise, information on local housing conditions and trends, such as a competitive market analysis, does not contain sufficient information on a specific property that is needed, and therefore, would not be acceptable as an evaluation.
Interagency Appraisal and Evaluation Guidelines (2010)
The objection is about the subject, not the arithmetic. A study of local conditions and trends describes the market around a property; an evaluation has to describe the property. The Guidelines do not throw such material out entirely, though. They add that information from those sources, while insufficient as an evaluation, "may be useful to develop an evaluation or appraisal."
The same Guidelines treat a close cousin separately. A broker price opinion is their term for a broker's or sales agent's estimate of a property's probable sales or listing price, which may include comparable sales or listings and is not by itself an appraisal or an evaluation.
Pricing a tract against what has sold nearby?
A pricing read is only as sound as the sales behind it. Share the parcel and county, and ask which nearby sales the opinion of value leans on and why. No cost, no obligation.
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We'll be in touch shortly with an honest read.
Questions about this term
Does a comparative market analysis have to say it is not an appraisal?
The conspicuous not-an-appraisal statement in Virginia's rules is written for appraisers: the Appraiser Board lets an appraiser issue market analysis studies that are not appraisals only if they say so conspicuously. For a real estate licensee, Va. Code 54.1-2010 A 1 says the valuation shall not be referred to as an appraisal and shall not be used in place of one.
Why can two agents' market analyses of the same land come out far apart?
No Virginia rule defines the study, so each one rests on the sales and listings its author chose and on how that author adjusted for differences in the ground. The useful part of any analysis is the reasoning: which sales carry the number, which were set aside, and why.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 54.1-2009: definitions for Real Estate Appraisers, including valuation and evaluation Code of Virginia
- Va. Code 54.1-2010: exemptions from the appraiser chapter Code of Virginia
- 18VAC130-20, Real Estate Appraiser Board Rules and Regulations Real Estate Appraiser Board
- Interagency Appraisal and Evaluation Guidelines (December 10, 2010) Federal Register