(April 12, 2019) Some people are confused by the difference between a Comparative Market Analysis (CMA) and an appraisal.
Basically, they are two different levels of reports in determining value for a piece of property.
The first report, a CMA, is usually completed by a licensed agent, and is less comprehensive than a full-fledged appraisal.
This report is used by agents to provide buyers and sellers with “comps,” or in other words, similar properties that have sold, and/or are current active listings in the MLS.
The report itself has a disclaimer that reads, “This analysis is not an appraisal. It is intended only for the purpose of assisting buyers or sellers or prospective buyers or sellers in deciding the listing, offering, or sale price of the real property.”
By comparison, an appraisal is a valuation of property by the estimate of an authorized person.
In order to be a valid appraisal, the authorized person will have a designation from a regulatory body governing the jurisdiction the appraiser operates within.
Some appraisers are licensed agents, but most agents are not licensed appraisers. The appraisal report is a more comprehensive analysis of the value of a property that includes adjustments for various differences between properties, whereas a CMA usually does not offer this level of detail.
CMA’s can be provided by local agents, free of charge, and provided pretty quickly. But when a full fledged appraisal report is needed, it must be ordered through your lending institution if applying for a loan, and the turnaround time can be anywhere from seven to 14 days, with a cost range of usually $400-$600 on residential property, and $1,000-$2,000 on commercial property.
There are also new guidelines in place since the Dodd-Frank Act in 2010 that bar mortgage brokers from ordering appraisals themselves.
Most lenders now use outside firms known as appraisal management companies to order appraisals, and the mortgage broker and lender are not able to talk to the appraiser about the value of the property they are evaluating.
However, appraisers and real estate agents do still discuss the property being appraised for the purpose of pointing out property specifics such as renovations and any abnormal circumstances surrounding sales that the MLS might not provide.
– Lauren Bunting is a licensed Associate Broker with Bunting Realty, Inc. in Berlin.