CMA & REAL ESTATE APPRAISAL - THE DIFFERENCE EXPLAINED...

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The difference between a CMA (Comparative Market Analysis) and a Real Estate Appraisal 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 a home’s value developed by your real estate broker to establish a Price Opinion or listing 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 and is not to be represented as a Real Estate Appraisal by a real estate broker or homeowner.  A real estate broker will not use or infer the term "appraised value" in their CMA .

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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., updates, features, and deferred maintenance or property condition.

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Some factors that will be considered are: 

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• 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 highways etc.)

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

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A Real Estate Appraisal is done by a licensed real estate appraiser and is most often used by lenders when issuing mortgages for refinancing and for buying a home.  Real Estate Appraisals can also used for any reason when a determination of fair market value is needed or wanted. 

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A real estate appraiser’s only job is to give an unbiased opinion of value of the subject property.  A real estate 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 (USPAP).  You can find more information about USPAP here.

 

Bottom Line:

 

A CMA is your real estate broker's professional effort to establish a Pricing Opinion in order to help you decide upon a listing price that will enable you to sell your property for the most money possible, or in the case of a  Buyer’s agent, to determine if your offer is in line with the Seller's Pricing Opinion / listing price, and will upon purchase offer you the best possible return on your investment.

 

A Real Estate Appraisal 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 at the time, in the then current market.

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If you are buying a home, your lender will almost always have a Real Estate 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 point, but it is highly recommended that a Real Estate Appraisal is still completed.