What's the Difference Between an Appraisal and a Comparative Market Analysis
No proper real estate transaction can completed unless the true value of the house is determined. Most real estate agents will look into closed sales to use as a guide to reaching a Fair Market value for the subject property. This would be considered a Comparable Market Analysis, or CMA.
In researching the CMA, like properties are selected, as close as possible to the subject property and normally no sales beyond 90-120 days. Adjustments are then made for differences in the properties using the subject home as the base and making dollar allowances up or down depending on the variables.
Allowances are normally made for square footage differences; lot size, number of bedrooms, baths, garages, pools and any item of substance that would carry a significant dollar differential. If the agent preparing the CMA uses enough comparative items, the Fair Market value of the house would be obtained and should provide a starting point for discussions with the seller of the house.
When a more accurate value is needed, such as for determining a homes' value for a mortgage, then a licensed appraisal is required. The appraiser will use many of the same base requirements, but unlike the real estate agent, they will go to the town records and research all sales that may not have been processed through conventional real estate channels.
Their evaluation sheets are far more detailed than the forms a real estate agent would use, and when reporting to a bank they will also do some additional checking for any property liens as well as building permits. The appraisal is considered the primary means to determine a real estate value and often this value cannot be challenged unless something was grossly misunderstood or overlooked.
Many real estate agents will prepare their CMA's with great accuracy and can come very close to the values as determined by an appraiser. Their research will also be as involved as the appraiser especially when working to verify the possibility of working on a short sale.
When a seller is looking for a reasonably good determination of value in order to sell a house, the CMA should suffice. It is often used to determine value in legal proceedings such as probate cases or divorces, provided all sides are in agreement.
For sellers it is essential to have a sales price on your home consistent with the most recent activity. We offer free market evaluations to assist you in your sale.
If you would like information on homes for sale in Central CT please call me at 203-206-0754 or send me an email. I would be happy to assist you or to discuss homes on the market in Central CT.
What's the Difference Between an Appraisal and a Comparative Market Analysis
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