FAQ: What's the Difference Between Estimates of Home Value?

Reblogger Jay McHugh
Education & Training with SendOutCards-Appreciation Marketing Expert
Original content by Dick Greenberg EB #1326335

If you're thinking of selling and want an idea of what your home is worth, or you're just curious, there are different types of estimates that you could access for information. Some of these are quick and easy, and some take a bit more time and may involve a cost to you. Generally, the greater the effort - and the transparency of that effort - the greater the accuracy.


One thing that is common to all of these estimates is that they are based on the concept of comparing a home to similar properties that have sold recently. The variation in accuracy between them is a factor of the quality of information available to make that comparison.


Let's take a look at the more common options, in order of increasing accuracy.


Tax Assessment

You could take a look at what your local government property assessor has your home valued at. The accuracy of these varies widely, depending on the methods used. Some assessors attempt to visit each property to gather enough information for a reasonable estimate. Others, like ours here in Colorado, have never actually seen the property and apply a general growth factor based on broad local economic conditions to the previous home value. This approach generally doesn't provide good enough information to be practical.


Automated Valuation Model

The fastest and easiest method uses an automated valuation model (AVM). These can be found on real estate websites like Zillow, and we even have one on our website, maryanddick.com. They provide a value based on a mathematical model that is generally somewhat more complex than what the assessor does, but again, it depends on the quality of the database that is used for comparison. AVMs are useful for a quick estimate, but can be off by significant amounts in either direction, so you wouldn't want to use that as a sole basis for pricing your home for the market.


Comparative Market Analysis

A comparative market analysis (CMA) is an estimate of a home's value provided by a local Realtor. While the format of these can vary widely, they are generally based on a detailed study of comparable properties and are significantly more accurate than the previous approaches, for two specific reasons:

Realtors have access to the most comprehensive and complete database of comparable property sales available - the Multiple Listing Service (MLS).

Realtors can apply to their assessment the market knowledge and expertise they have developed from their years of experience with the local real estate market.

CMAs are generally free and can be completed in a couple of days. And a good one will provide useful transparency regarding the process used - a detailed look at the individual comparable properties, specifics about differences and similarities between your home and the comparables, and data about market performance.

CMAs are generally accurate enough to be used for pricing a home for market, and are the most common method used for that purpose. And while they may not be so exact that they hit the final sale price on the decimal, they are generally sufficient to place a home in the right competitive situation to let market forces do their job efficiently.

If you're definitely going to sell, and not merely just curious, this is the method you'll want to use. And as an accuracy check, it's always wise to ask several Realtors to provide CMAs for comparison purposes.



Appraisals are similar to the CMA in concept, but generally provide a higher degree of accuracy. And they're usually prepared for a client who has a lot riding on that accuracy - the bank making the loan on the property.

Appraisers typically use the same databases as Realtors - the MLS - but there are some significant differences. Appraisers only consider sold properties, with values the market has verified by a completed transaction. Their analysis is more complex and detailed than a CMA. And appraisers generally only do appraisals - they're trained and licensed for it, and it's their whole job. They generally have a much deeper base of experience to call on.

You may hear some grumbling or concern from your Realtor about appraisals and accuracy. But that's mostly because a lot is riding on them agreeing with the contract price. And consider this: While a CMA can be very effective in pricing for the market by providing a value range, the appraisal has a target value that has to be matched or exceeded to satisfy all parties. That's a tougher job.


All of the above methods have their uses and work well for different purposes. But when choosing one that matches your needs, keep in mind that the final arbiter of home value is always going to be the market, and until it has spoken, everything is just an estimate.

Mary & Dick

Mary & Dick Greenberg
New Paradigm Partners LLC
2601 S. Lemay Ave. #41
Fort Collins, CO 80525


Data Source: IRES MLS


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Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Jay. A CMA from an experienced agent can sometimes be better than a appraisal from an appraiser selected from a pool. Enjoy your day!

Jun 21, 2017 05:05 AM #1
Harry F. D'Elia III
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

Thanks for sharing this reblog post with us today

Jun 21, 2017 05:57 AM #2
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