The Difference Between An Appraisal And Comparative Market Analysis

Before you engage in any real estate transaction, you need to know as much as you can about the home's value. There are two related but distinct processes that help people pin down the valuation of a property before they move forward: comparative market analysis and home appraisal.

Both of these will be performed at different steps in the sale process. Knowing the difference between the two can save you some valuable time.

• Comparative Market Analysis (CMA)
  A comparative market analysis is typically performed by a real estate agent. Thanks to MLS, real estate pros have the opportunity to compare your home to others that have sold in your general area. Selling prices, time on market, home improvements, and square footage can be used to determine an approximate value of your home.
  
  When a CMA is completed, it will provide you with a low, medium, and high selling price for your home. It will also give an estimate of the average number of days your home may be on the market.
  
  
• Home Appraisal
  The home appraisal is paid for by potential home buyers — either out of pocket or as part of the fees they will ultimately finance in their mortgage.
  
  An appraisal of the home is performed after the buyer applies for a loan with a bank or other lender. Once the buyer submits an offer and requests financing, a licensed appraiser is dispatched.
  
  All practicing home appraisers must be licensed or certified by the state. Although they visit a property at the request of the bank, appraisers are intended to report neutral observations about each home. The comprehensive report they compile helps to determine the home's fair market value.
  
  This protects the bank from lending too much money for any given home.
  
  Though an appraisal will include some basic information on the home's condition, more time is spent on recent information about similar listings and housing market conditions in the neighborhood.
  
  Minor repairs and renovations performed before an appraisal can help raise the home's assessed value.

CMA Versus Home Appraisal: Final Considerations

Both a comparative market analysis and home appraisal provide valuable insights that help you and your real estate agent move toward a successful sale. Assuming a property spends only a moderate amount of time on the market, each usually needs to be completed only once.

Sometimes, however, a lender might request a new appraisal even if the previous appraisal was only a short time ago. You might even get a CMA before you make a final decision about selling your home. Each situation is different.

An experienced real estate agent can help you by ensuring you're equipped with an accurate CMA. Plus, when the time comes to prepare for an appraisal, they can guide you on the most important steps to raise your home's value in your budget and timeline.

As with anything in real estate, the sooner you get started with selling your home, the smoother the process.

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