The process of selling a house is hectic, especially to first time investors in the real estate market, because the jargons are very confusing. The difference between a competitive marketing analysis (CMA) and home appraisal is one of the aspects of the real estate transaction process that could be a little confusing. The two reports are important in the process of selling a house and despite the few similarities, there are differences between them which are important.
What is a CMA?
Another important part of the process that your real estate agent will perform is a competitive marketing analysis to help them come up with an appropriate listing price of your home. A CMA is generally a free service offered by your listing agent.
A CMA will evaluate the properties that have been sold in the recent past, which are similar to yours, also known as comps. This information is gathered by real estate agents through the multiple listing service (MLS), which is a centralized database that combines the listing of properties on sale by different agents. It is important to realize that the MLS is only available to real estate agents and this is part of the challenges of selling your home as FSBO (for sale by owner).
Your agent will do a competitive marketing analysis by looking at homes that are similar to yours in size and features. The CMA gives information on the properties that are available, those that are pending, and the recently sold properties and the expired properties. An elaborate CMA will give the pricing of your house in terms of low, median, and high prices as well as an estimated average time that your house might take to sell. A CMA may not be a science but it can give relatively accurate information on what can be a reasonable list price.
Appraisal is an examination or appraisal of the worth of a property, normally by a qualified expert. The process is important in several applications, including real estate sales, insurance, and financial reporting because it assists in identifying the fair market value of the property or object in question.
Unlike a CMA, which is based more on experience and intuition of an agent, an appraisal is a more formal and structured valuation process. The buyer will tend to dictate the appraisal process based on his or her view and not necessarily based on what the selling process determines.
What Is an Appraisal?
When a customer wants to take a loan on a certain property, the bank wants to be sure that the property is of worth to their investment. The bank will require an independent third party to carry out an appraisal of the value of the home. Home appraisers are licensed by the states where they work and they offer their services at a fee.
Home appraisers follow a systematic procedure whereby they take into account a number of factors both in the interior and exterior of the premises. Professionals have the tools to assess the current status of a property with consideration of the age, condition, and general functionality.
The Differences Between a CMA and Real Estate Appraisal
There are a couple of key differences between a CMA and an appraisal. The appraisers are licensed experts who tend to work with lenders to verify property values. This implies that an appraisal can only be carried out by a licensed real estate appraiser.
Real estate agents usually provide CMA services and there is no professional body to regulate them. Home appraisers are required to undergo the licensing and certification procedure before they are able to provide their services. A newly licensed real estate agent can do a CMA.
Finally, appraisals may be used in the purchase or sale contract, but CMAs are normally used only as documentation.
Both real estate agents and appraisers use recent sales information of similar properties to come up with value.
A comparative market analysis is no less an estimate of value than an appraisal which is often relied upon. Sometimes, lenders are inclined to over-emphasize the role of an appraisal, making it a supreme measure of the value of a home.
How Can I Get a Comparative Market Analysis?
To have a detailed evaluation of the value of your property, contact a local real estate agent. Realtors often offer complimentary value estimates. Agents provide this service hoping to get future opportunities. Most agents will be eager to provide a CMA to you, even when you are only interested in knowing the current value, and do not want to sell.
Unless selling is on their priority list, they will not be willing to make time to come to your home immediately but rather they will find a way to fit you in their schedule.
An online tool will not give you an accurate analysis of the fair market value of your property as compared to a home visit by an agent. Most people are inclined to use websites like Zillow and take the price as it is.