The difference between a CMA and a Fee Appraisal, and another reason correct pricing saves heartache

Real Estate Agent with Roy Wheeler Realty Co.

It's good to know how an appraiser works, how an appraiser comes up with their magical number.  It's also critically important to know that an appraisal can send your beautifully-ratified cotntract of purchase right to the trash can.  It is a fact that most buyers will require a loan to purchase your home, and the bank funding their loan will require an appraisal of your house that shows the house is valued at or above the amount of the loan.

appraisals and home values,www.charlottesvilletalk.comWhat You Must Know About Home Appraisals
Article From
By: G. M. Filisko
Published: March 12, 2010

Understanding how appraisals work will help you achieve a quick and profitable refinance or sale.

When you refinance or sell your home, the lender will insist that you get an appraisal--an opinion of the value of your home based on what similar homes in your area have sold for in recent months.

Here are five tips about the appraised value of your home.

1. An appraisal isn't an exact science
When appraisers evaluate a home's value, they're giving their best opinion based on how the home's features stack up against those of similar homes recently sold nearby. One appraiser may factor in a recent sale, but another may consider that sale too long ago, or the home too different, or too far away to be a fair comparison. The result can be differences in the values two separate appraisers set for your home.

2. Appraisals have different purposes

If the appraisal is being used by a lender giving a loan on the home, the appraised value will be the lower of market value (what it would sell for on the open market today) and the price you paid for the house if you recently bought it.


An appraisal being used to figure out how much to insure your home for or to determine your property taxes may rely on other factors and arrive at different values. For example, though an appraisal for a home loan evaluates today's market value, an appraisal for insurance purposes calculates what it would cost to rebuild your home at today's building material and labor rates, which can result in two different numbers.

Appraisals are also different from CMAs, or competitive market analyses. In a CMA, a real estate agent relies on market expertise to estimate how much your home will sell for in a specific time period. The price your home will sell for in 30 days may be different than the price your home will sell for in 120 days. Because real estate agents don't follow the rules appraisers do, there can be variations between CMAs and appraisals on the same home.

3. An appraisal is a snapshot
Home prices shift, and appraised values will shift with those market changes. Your home may be appraised at $150,000 today, but in two months when you refinance or list it for sale, the appraised value could be lower or higher depending on how your market has performed.

4. Appraisals don't factor in your personal issues
You may have a reason you must sell immediately, such as a job loss or transfer, which can affect the amount of money you'll accept to complete the transaction in your time frame. An appraisal doesn't consider those personal factors.

5. You can ask for a second opinion

If your home appraisal comes back at a value you believe is too low, you can request that a second appraisal be performed by a different appraiser. You, or potential buyers, if they've requested the appraisal, will have to pay for the second appraisal. But it may be worth it to keep the sale from collapsing from a faulty appraisal. On the other hand, the appraisal may be accurate, and it may be a sign that you need to adjust your pricing or the size of the loan you're refinancing.

More from HouseLogic
How to use an appraisal to eliminate private mortgage insurance
Understanding the assessed value of your home for tax purposes
Understanding the amount at which to insure your home

Other web resources
More information on appraisals
How to improve the appraised value of your home

G.M. Filisko is an attorney and award-winning writer who's had more than 10 appraisals performed on her properties in the past 20 years. A frequent contributor to many national publications including, REALTOR Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS®
Copyright 2011.  All rights reserved.



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Vickie Nagy
Palm Springs, CA
Good catch from House Logic. I really didn't know that the shared resources had any valuable information. Obviously they do!
Feb 08, 2011 04:14 PM #1
Kristi DeFazio
RE/MAX Advantage - Colorado Springs, CO
Colorado Springs Rea lEstate 719-459-5468

It is so important to know that if they price the home too high it may not appraise for that anyway.

Feb 08, 2011 04:16 PM #2
Andrea Swiedler
Coldwell Banker Residential Brokerage - New Milford, CT
Realtor, Southern Litchfield County CT

Virginia, wow, great article. I also didn't realize these were available for us to use... great information!

Feb 09, 2011 02:03 AM #3
Virginia Gardner
Roy Wheeler Realty Co. - Charlottesville, VA
Realtor, Charlottesville, Serving Central Virginia

Vickie and Andrea, YES!  I read someone's article about reprinting from House Logic, so I went over there and started looking around... so nice to be able to pick someone else's brain now and then.  I sent the HouseLogic people links to my first couple of reprints, to make sure they were satisfied with the way I use them and how I attribute them.  I also provide commentary, and I attribute in the beginning and again at the end, including links.  I do also have their widget on my sidebar, which I happen to like.

Kristi, I think this is one of our best defenses for proper pricing.  If the appraiser is going to be unable to find comps within the past year to support the price, that contract is hitting the trach can.

Feb 09, 2011 02:24 AM #4
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Virginia Gardner

Realtor, Charlottesville, Serving Central Virginia
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