Sellers shouldn't set a price until they know their property's value. By the same token, buyers shouldn't agree to purchase real estate until they've assessed the asking price. A comparative market analysis caters to both.
A comparative market analysis, often referred as a CMA, is an informal written evaluation of the current value of any given property; CMAs are generated by a real estate agent. A CMA looks at similar properties in the area that have recently sold. By comparing these properties and adjusting for feature differences, as well as looking at properties currently listed in the area, a CMA produces a comprehensive assessment of a home's value. The analysis can be used by sellers to formulate an asking price or by purchasers when deciding how much to offer for a property.
Later in the home selling process, if the homebuyer is originating a mortgage, the lender will require the property to have an official appraisal done. An appraisal carefully reviews specific elements of the property to derive a figure and can only be completed by a licensed appraiser.