Prospective sellers unfamiliar with the process may look to real estate agents for an appraisal. In some cases, an appraisal is what they want, but that’s not something a real estate agent can provide. In other cases, what they’re actually looking for is a comparative market analysis, or CMA, which an agent can indeed help with. These are both methods of property valuation, but they have significant differences.
A CMA is an estimate of what buyers are likely to pay based on recent market data. A real estate agent creates a CMA by analyzing market trends and researching recent sales and listings of similar properties. By comparing the prices and amenities of those properties, the agent will arrive at an estimate of market value, which will be a price that, in a normal market, a willing buyer would pay a motivated seller. In most cases, this value is likely in the vicinity of what the agent believes would be an effective listing price.
An appraisal is created by an appraiser, not a real estate agent. An appraiser is an independent licensed professional who objectively looks at the condition and location of a property as well as the quality of comparable sales and makes proven value adjustments to the comparable features where they differ from the subject property. With an appraisal, the ultimate value is defensible and documented and is arrived at by someone who has no interest in the property. It’s not uncommon for this value to differ slightly from the value estimated by a CMA, though a large difference may raise some questions.
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