How Realtors Use MLS Data to Create Comparable Market Analysis Reports

"Running comps" is a jargon expression used by Realtors and other professionals in the real estate industry when they prepare comparable market analysis (CMA) reports. Essentially, CMAs are research reports used for pricing potential real estate deals; sellers use them to set the pricing for their properties, buyers review them to evaluate prices before making offers, and investors evaluate them to gauge the temperature of property markets.

The data collected to conduct a CMA comes from the Multiple Listing Service (MLS), which functions as a central hub for real estate professionals to share information about residential properties. Although the MLS is not a centralized database, its architecture emphasizes making connections between property markets so that users feel as if they are accessing a dynamic central data repository. The MLS is better described as a cooperative network of databases, and selling prices are among the most important pieces of information collected therein.

MLS pricing data is at the heart of CMA reports. Running comps consists of finding properties that are similar in terms of location, size, age, condition, and features. Realtors usually focus on listings that have sold recently, often within the last three to six months, to get an idea of market values. Part of the CMA drafting process involves making adjustments to the listings so that they are reasonably comparable. If one of the listings sits on a larger lot, for example, its higher pricing should be adjusted downward. Another example would be when the subject property has a remodeled gourmet kitchen and the other listings don't; in this case, the price should be adjusted higher.

The adjusted pricing of the CMA can guide listing, purchasing, and investing actions. The pricing ranges in the MLS are assumed to be reasonable because they are ultimately set by supply, demand, and the competitive aspect of real estate markets. CMA reports help sellers set realistic asking prices to attract buyers and promote timely sales. Buyers rely on CMA reports to guide their offers. Investors evaluate CMA reports to decide the type of positions they should take according to market conditions.

CMA reports are sometimes referred to as "pencil appraisals" or automated valuation model (AVM) reports, but these terms are incorrect even when they are part of real estate "shop talk." CMAs are neither property appraisals nor AVM reports because they differ in methodology, purpose, and accuracy. Appraisals involve inspections and assessments. AVM reports are generated by computer algorithms using statistical models that get data from public records, property data, and market trends; they are often used by popular real estate analytics websites such as Zillow to guide their content.

With all the above in mind, let's review the process Realtors follow when running comps and preparing CMAs for their clients. We'll use a scenario of a seller who wants to sell her 3/2 single-family home in the uptown Buckhead district of Atlanta. The client's property was built in the 80s in an American Craftsman style; it offers 2,058 square feet of interior space, and it is a move-in ready home with strong curb appeal. She wants to sell for more than $600,000 at a time when the median sale prices in Buckhead are at $638,000, and she does not want to deal with bidding wars.

Many CMA reports are prepared before Realtors tour the subject property, so the best initial move is to conduct preliminary research and ask clients about upgrades, selling points, and potential issues that prospective buyers may use from a bargaining standpoint. This is a good time to pull a title search and check municipal assessments to determine fair property values. The next step involves the practical pulling of comps from MLS platforms; this starts with entering the subject property address on the mapping component and enabling the active, pending, and closed filters.

When pulling comps for well-established residential markets like Buckhead, the MLS mapping component will display layers with well-defined district boundaries by default. If this is not the case, Realtors can manually set their search radius, which in suburban areas can be one mile. Many MLS platforms feature options to display neighborhood outlines that increase the accuracy of the CMA. Let's say the MLS map shows the subject property in the middle of the Garden Hills subdivision of Buckhead, which is a family-friendly neighborhood where a $600,000 listing is justified.

Most Realtors use MLS platforms with automated CMA workflows, so the comps are instantly pulled after the subject property address is entered and the search radius is manually adjusted. The default active, pending, and recently closed parameters effectively create a CMA report because they show properties that are listed or were listed in the last three months. The comps show as pins on the map, and Realtors can group them with a polygon mapping tool for the report.

If the MLS returns more than 15 comps inside the polygon group, Realtors can narrow the parameters with adjustments to the floor plan and year built. Generally, they want to select listings built in the five-year period before or after the subject property. The most common adjustment for square footage is 10%. After completing the adjustments, Realtors can view the results and select those that approximate the client's listing goals. The final step involves the generation of the CMA report, which can be exported to third-party real estate productivity platforms.

In our Buckhead scenario, the Realtor has not seen the property before the first CMA report; nonetheless, there is a good chance that the MLS data describing the listing is reasonably updated, particularly if it went through a closing in the last 15 years. Many Realtors prepare a report to have on hand for their first tour of the subject property and initial meeting with clients. Further adjustments can be made after touring the property and assessing unique characteristics such as updated kitchens, landscaping, finished basements, and others. Realtors must carefully review each comp individually, considering all the qualitative factors that can significantly impact value in established markets.