Updated April 2026

Mastering the Comparative Market Analysis (CMA) for the Kentucky Real Estate Exam

Last updated: April 2026

For aspiring real estate agents in the Bluegrass State, understanding how to accurately value a property is a fundamental skill. A Comparative Market Analysis (CMA) is the primary tool licensees use to help sellers set a listing price and buyers determine a competitive offer. Because property valuation is heavily regulated, the Kentucky Real Estate Commission (KREC) places significant emphasis on this topic during the licensing exam. This guide will walk you through the legal boundaries, mathematical formulas, and practical steps of creating a CMA so you can ace your test and succeed in your career. For a broader overview of exam topics, be sure to review our Complete Kentucky Exam Guide.

Kentucky Legal Framework: CMA vs. Appraisal

One of the most critical distinctions you will be tested on is the difference between a CMA and a formal appraisal. Under Kentucky Revised Statutes (KRS) Chapter 324, real estate licensees are authorized to provide a CMA or a Broker Price Opinion (BPO) in the ordinary course of their business. However, they are strictly prohibited from referring to this analysis as an "appraisal."

In Kentucky, an appraisal can only be performed by a licensed or certified appraiser regulated under KRS Chapter 324A. When a real estate agent provides a CMA or BPO—especially if a fee is charged separate from a brokerage commission—they must include a specific, written disclosure statement indicating that the document is a market analysis, not an appraisal, and that it may not be used for primary mortgage financing purposes.

The 4 Steps of a Comparative Market Analysis

When constructing a CMA, licensees use the Sales Comparison Approach. This method relies on the principle of substitution, which states that a buyer will not pay more for a property than the cost of acquiring an equally desirable substitute. The process involves four key steps.

1. Analyze the Subject Property

The "subject property" is the home you are trying to value. Before looking at other homes, you must gather detailed information about the subject, including its age, square footage, lot size, number of bedrooms and bathrooms, condition, and any unique amenities (e.g., a finished basement or a swimming pool).

2. Select Comparable Properties (Comps)

Next, you must find recently sold properties that closely match the subject property. For the Kentucky exam, remember the ideal criteria for selecting comps:

  • Status: Use "Sold" properties. Active listings only show what sellers want, while sold listings show what buyers will actually pay.
  • Timeframe: Sold within the last 3 to 6 months. In rapidly changing markets, older comps are less reliable.
  • Proximity: Located in the same neighborhood or within a 1-mile radius (though rural Kentucky properties may require a wider radius).
  • Similarity: Similar style, age, and square footage.

3. Adjust the Comparables

Because no two properties are exactly alike, you must adjust the sales prices of the comps to reflect the features of the subject property. Exam Tip: You always adjust the comparable, never the subject property.

To remember how to make adjustments, use these two essential acronyms:

  • CBS (Comparable Better, Subtract): If the comparable property has a feature the subject lacks (e.g., an extra bathroom), you subtract the value of that feature from the comparable's sold price.
  • SBA (Subject Better, Add): If the subject property has a feature the comparable lacks (e.g., a two-car garage), you add the value of that feature to the comparable's sold price.

Typical CMA Adjustment Values (Kentucky Market Data)

4. Reconcile the Data

After adjusting 3 to 4 comps, you will have a range of adjusted sales prices. Reconciliation is the process of analyzing these numbers to determine a final suggested price range. You do not simply average the numbers; instead, you give the most weight to the comparable that required the fewest adjustments, as it is the most similar to the subject property.

Practical Scenario: Adjusting Comps in Kentucky

Let’s look at a practical math scenario you might encounter on the Kentucky real estate exam.

Subject Property: A 3-bedroom, 2-bathroom home in Lexington with no garage.
Comparable Property: A 3-bedroom, 2-bathroom home in the same neighborhood that recently sold for $250,000. It features a 2-car garage.

Market Data: A 2-car garage is valued at $8,000 in this market.

The Math:
Look at the comparable. Is the Comparable Better or is the Subject Better? The comparable has a garage, so the Comparable is Better. Therefore, we use the CBS rule (Comparable Better, Subtract).
$250,000 (Comp Sold Price) - $8,000 (Garage Value) = $242,000.

The adjusted value of this comparable is $242,000. Accurate pricing through a CMA is vital not just for listing, but also for financing. If a home is overpriced and doesn't appraise, it can ruin the buyer's financing. To understand how property valuation affects buyer financing, review our guide on Kentucky loan-to-value and down payment calculations.

Common CMA Mistakes to Avoid on the Exam

When taking the Kentucky real estate exam, watch out for trick questions related to property valuation:

  • Adjusting the Subject: The exam will try to trick you into adding or subtracting from the subject property's value. Always adjust the comps.
  • Using the Wrong Valuation Approach: A CMA (Sales Comparison Approach) is used for residential homes and vacant land. If the question asks about valuing an apartment complex or commercial strip mall, you would use the Income Approach. You can learn more about commercial real estate concepts in our articles on Kentucky lease types and terms and Kentucky ADA compliance in real estate.
  • Ignoring KREC Disclosures: Remember that any written CMA or BPO provided to a client must clearly state that it is not a formal appraisal.

Frequently Asked Questions (FAQs)

Can a Kentucky real estate agent charge a separate fee for a CMA?

Yes, under Kentucky law, real estate licensees can charge a fee for a Broker Price Opinion (BPO) or CMA. However, if they do, they must provide a written disclosure stating that the document is not an appraisal performed by a licensed appraiser and cannot be used for primary mortgage financing.

How far back should I look for comparable sales in Kentucky?

For the most accurate CMA, you should look for properties that have sold within the last 3 to 6 months. If you are working in a rural part of Kentucky with low turnover, you may occasionally need to look back 9 to 12 months, but recent sales are always preferred.

What are the CBS and SBA rules in real estate?

CBS stands for "Comparable Better, Subtract." If the comparable has a feature the subject lacks, subtract the value from the comparable. SBA stands for "Subject Better, Add." If the subject has a feature the comparable lacks, add the value to the comparable. These rules dictate how to equalize properties during a CMA.

Why shouldn't I use active listings as my primary comps?

Active listings represent the seller's asking price, not the actual market value. A property may be overpriced and sit on the market for months. Sold properties are the only true indicator of what a ready, willing, and able buyer is actually willing to pay in the current market.

Does a CMA determine the exact price a home will sell for?

No. A CMA provides a highly educated estimate or a suggested price range based on historical data. The final sales price is ultimately determined by the open market—what a buyer is willing to pay and what the seller is willing to accept at a specific moment in time.

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