Humber/Ontario Real Estate Course 2 Exam Practice

What is the purpose of a Comparative Market Analysis (CMA)?

1. It is commonly used by appraisers to estimate the market value of a property.

2. It can be helpful for a seller evaluating any offers received.

3. It must include an estimate of selling costs and net proceeds as required.

4. It is also commonly referred to as a 'narrative report' or a 'form report.'

5. It determines the market trends in the nearby area over the past year.

6. It replaces the need for a professional appraisal in most cases.

The correct answer is: It can be helpful for a seller evaluating any offers received.

A Comparative Market Analysis (CMA) is typically prepared by real estate agents to help sellers determine the appropriate listing price for their property based on the selling prices of similar properties in the area. Therefore, the purpose of a CMA is to assist a seller in evaluating any offers received by providing them with insights into market trends, comparable properties, and a suggested listing price. Option A is not the correct choice because appraisers and real estate agents have different methodologies for determining property value. Option C is not essential in a CMA as it primarily focuses on determining the appropriate listing price. Option D is incorrect as a CMA is not commonly referred to as a 'narrative report' or a 'form report.' Option E is also incorrect as the main focus of a CMA is on evaluating comparable properties and determining a listing price, rather than on market trends in the nearby area. Lastly, Option F is incorrect because while a CMA can be a useful tool in determining a listing price, it does not replace the need for a professional appraisal in all cases.