A Competitive Market Analysis (CMA) is an evaluation prepared by a real estate licensee to help a client determine a suitable price for a property. Its primary function is to establish a probable sales price based on the principle of substitution. For a seller, the CMA is fundamental in setting a competitive listing price that reflects current market conditions. For a buyer, a CMA is equally valuable as it provides an objective basis for crafting a reasonable offer and negotiating a fair purchase price, ensuring their offer is aligned with the property's market value.

A. Insurance value is based on the cost to replace the property (replacement cost), not its market value, which is what a CMA estimates.

B. Depreciable value is an accounting concept used for tax purposes on income-producing property and is not determined by a CMA.

C. A CMA is based on recent sales of comparable properties, not on local tax assessments, which are used for taxation and may not reflect current market value.

1. 254 Code of Massachusetts Regulations (CMR) 3.00(13)(a): This regulation governs the professional standards for Massachusetts real estate licensees. It specifies that a broker or salesperson may perform a Broker Price Opinion (BPO) or a Comparative Market Analysis (CMA) for a consumer for a fee, implicitly acknowledging its role in advising clients (both buyers and sellers) on property pricing and value in a transaction.

2. Ling, D. C., & Archer, W. R. (2018). Real Estate Principles: A Value Approach (6th ed.). McGraw-Hill Education. Chapter 7, "Valuation Using the Sales Comparison Approach," details the methodology that forms the basis of a CMA. The text explains that this approach is used by appraisers, brokers, and buyers' agents to estimate market value, confirming its utility for both sides of a transaction in determining a property's worth in the current market.

3. Massachusetts Board of Registration of Real Estate Brokers and Salespersons, Candidate Information Bulletin: The curriculum outline for the salesperson exam includes "Valuation and Market Analysis." This section requires candidates to understand the purpose of a CMA, which is to assist sellers in pricing property and buyers in making offers, distinguishing it from a formal appraisal.