CMA vs Appraisal

What is a comparative market analysis (CMA) and how is it different from a real estate appraisal report?

The difference between a CMA (comparative market analysis) and a real estate appraisal report is that one is done by your real estate broker and one is done by a licensed real estate appraiser.

A CMA is an estimate of your home’s value done by your real estate broker to establish a listing or offer price when you decide that you want to sell or buy a home or property.  This service is always offered free of charge and without obligation.  A CMA should only be used as a reference for deciding at what price you should list or buy your home for.

Your broker will create a CMA by utilizing recent sales data and using their knowledge of the local market.  She/He will compare your home with homes that are most like yours in your neighborhood, or similar neighborhoods nearby.  A comparable home/property is one that is of the same type (single-family, multi-family, commercial, etc.), is in similar condition inside and out, and has the same or close to the same number of units and land/living area size. 

Some factors that will be considered are: 

  • Comparable properties that have recently sold (3-6 Months),
  • Properties that are currently listed in the Multiple Listing Service (MLS),
  • How long similar properties have been on the market,
  • Property listings that have expired or have not sold,
  • Location (such as corner lot, school district, street traffic, proximity to hi-ways etc.)

Other methods may be used by your broker depending on the type of subject property and/or the needs of the client.

A real estate appraisal is done by a licensed real estate appraiser and is most often used by lenders when issuing mortgages for refinancing or buying/selling a home. Appraisals, although, can also used for any other reason a determination of value is needed or wanted.  

A real estate appraiser’s only job is to give an unbiased opinion of value of the subject property.  An appraiser will use similar methods in coming to a property value as your broker but they must also follow strict licensing and industry guidelines as well as follow the Uniform Standards of Professional Appraisal Practices (USAP).  You can find more about USAP here.

Simply put, a CMA is your broker’s attempt to establish an opinion of value in order to sell your property for the most money possible, or in the case of a  buyer’s agent, to determine if your offer is not above their opinion of value.  An appraisal report is a licensed appraiser’s opinion of fair market value and whether or not the property is worth the price you are trying to buy or sell it for.

If you are buying a home, your lender will always have an appraisal done and you have a right to a copy, but you usually have to ask for it.  If you plan on not using financing to obtain a property, a CMA is a good reference but it is highly recommended an appraisal report is still done. 

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