CMA vs Appraisal
Realtors® provide their clients with a Comparative Market Analysis (CMA) when determining the best listing price for a home. Often, buyer’s agents will also provide a CMA if their client wants to make an offer on a home. A CMA provides an overview of homes in the area that are actively on the market, have recently sold, and ones that have terminated their contracts. The active homes on the market provide the sellers with an overview of their current competition. It lets the seller know what other houses in the area are listed for and how their home compares with what is available for buyers. The recently sold houses tell what buyers are willing to pay and the terminated listings tell what buyers are not willing to pay. Sellers will typically terminate their listing because they feel their house is worth more than what they were offered when the house was on the market. A CMA is less comprehensive than a full appraisal and comes with a disclaimer that states: “This represents an estimated sale price for this property. It is not the same as the opinion of value in an appraisal developed by a licensed appraiser under the Uniform Standards of Professional Appraisal Practice [USPAP].”
An appraisal is the act of developing an opinion of value. Appraisals are conducted by licensed appraisers who are regulated by the Texas Appraisal Licensing and Certification Board (TALCB). Appraisers specialize in appraising property and provide a more comprehensive analysis of value in their reports. Like Realtors® they also use comparable sales in the area, however appraisers also make adjustments for various differences between the subject property and the comparables used. Appraisers are also required to follow strict guidelines laid out by USPAP when writing their reports and choosing their comparable properties. An appraisal report is a much more comprehensive market analysis than a CMA.
In short, a CMA and an appraisal report are two different levels of reports that are prepared for different purposes. A CMA is provided by a Realtor® free of charge and is used to help determine the sales price or offer price for a home. A CMA can be completed within a few hours whereas an appraisal can take anywhere from a few days to weeks. An appraisal is typically ordered by a lender when needed for financing and can range in cost from $400-thousands depending on the property.