What is the difference between the Appraisal and CMA anyway?
If you are thinking and planning to sell your home, then most likely you came across a phrase “Comparative Market Analysis” or in short, CMA. And you might wonder how this analysis may be different from the actual appraisal. Well, both, CMA and appraisal, estimate the market value of the property and to arrive at such estimate, they use a sales comparison approach. In this process the subject property is being compared to other recently sold properties in the area that share similar features. These similar properties are referred to as comparables or comps.
Comparative Market Analysis
This analysis is prepared by the real estate professional and relies on the data from Multiple Listing Service (MLS) as well as agent’s experience and instinct. Its aim is to establish the best listing price and that is a suggested gross sale price of a home when it is placed on the market. The agent will work on finding the properties that best
match the subject home. Even if you are not thinking about selling your home in the near future, it is a great idea to call the
professional to prepare a CMA report for your home.
After receiving your report, you will be able to see how much equity you have and you might even consider certain renovations and updates.
Appraisal
Appraisals are usually ordered and required by most mortgage lenders to ensure that the sales price corresponds with the property’s value. This a more formal approach and as the case is with the CMA, it does consider recently sold properties in the area, but it also takes a more detailed look at the subject property: it’s interior, exterior and characteristics. Lenders want to make sure that the home is a good investment. The appraisers must be licensed in New Jersey and they work for a fee. What happens when a subject property does not appraise? When the appraisal value is lower than expected, the lender may not approve the loan and the transaction can even fallthrough. It is up to the seller and buyer to work together and arrive at mutually beneficial solution to hold the deal together.
Kasia Karolewska, Sales Associate
