Before you list your property, you'll want to know as much as you can about your home's value. There are two related but distinct processes that help people pin down the valuation of a property before they move forward: comparative market analysis and home appraisal. Both will be performed at different steps in the sale process. Knowing the difference between the two can save you some valuable time.
Comparative Market Analysis (CMA)
A comparative market analysis (CMA) is performed by a licensed real estate agent before a property is listed to determine the approximate value. Thanks to the multiple listing service (MLS), your Jones Group Realtor (local expert) can compare your home to others that have sold in your area. Selling prices, LOCATION, time on market, home improvements, condition, and square footage along with many other factors will be used to determine a value or approximate listing price. Upon review of the CMA with your agent, you both will discuss your expectations, goals, and timeline. Additionally, with advice from your agent you'll want to determine how best to prepare your home for sale to get the best result.
The home appraisal is paid for by potential home buyers — either out of pocket or as part of the fees they will ultimately finance in their mortgage.
An appraisal of the home is performed after the buyer applies for a loan with a bank or other lender. Once the buyer submits an offer and requests financing, a licensed appraiser is dispatched by the lender.
All practicing home appraisers must be licensed or certified by the state. Although they visit a property at the request of the bank, appraisers are intended to report neutral observations about each home. The comprehensive report they compile helps to determine the home's fair market value. This protects the bank from lending too much money for any given home.
Though an appraisal will include some basic information on the home's condition, more time is spent on recent information about similar listings and housing market conditions in the neighborhood.
Minor repairs and renovations performed before an appraisal can help raise the home's assessed value.
CMA Versus Home Appraisal: Final Considerations
Both a comparative market analysis and home appraisal provide valuable insights that help you and your real estate agent move toward a successful sale. Assuming a property spends only a moderate amount of time on the market, each usually needs to be completed only once.
Sometimes, however, a lender might request a new appraisal even if the previous appraisal was only a short time ago. If the CMA was prepared several months prior to listing, you'll want to take a final look at recent comps/or get another CMA before you make a final decision on a listing price on your home/property. Each situation is different.
An experienced real estate agent can help you by ensuring you're equipped with an accurate CMA. Plus, when the time comes to prepare for an appraisal, they can guide you on the most important steps to raise your home's value in your budget and timeline.
As with anything in real estate, the sooner you start the process of selling your home, the smoother the process.