Humber/Ontario Real Estate Course 3 Exam Practice

Which statement is true regarding a comparative market analysis (CMA)?

1. It's primarily used by appraisers to determine property value.

2. Typically includes only sold and currently listed properties.

3. Must be signed by a salesperson preparing it.

4. Used as a guide when discussing listing prices with sellers.

5. Includes listings from competing agencies only.

6. Primarily used for tax assessment purposes.

The correct answer is: Used as a guide when discussing listing prices with sellers.

A comparative market analysis (CMA) is indeed utilized primarily as a guide when discussing listing prices with sellers. This tool allows real estate professionals to evaluate similar properties that have recently sold, are currently on the market, and were previously withdrawn or expired, to provide a realistic estimate of a property's market value based on current market trends and conditions. Using a CMA is essential in advising sellers on an appropriate listing price, ensuring that it is competitive enough to attract buyers while maximizing the seller's potential return. The analysis takes into consideration various factors, including the location, features, and condition of comparable properties, to facilitate informative discussions regarding pricing strategy. The other options contain misinterpretations of the CMA’s purpose and use. For instance, while appraisers may use similar methodologies, a CMA is distinctively aimed at guiding real estate agents and clients rather than being a formal appraisal. Additionally, a comprehensive CMA typically encompasses more than just sold and currently listed properties, as it also includes those that were unsuccessful in selling, to offer a full market perspective. Unlike formal documents, there is no requirement for a CMA to be signed by a salesperson, and it does not solely include listings from competing agencies nor is it mainly used for tax purposes.