The CMA and the Property Appraisal-Siblings but not Twins!
Two documents, the comparative market analysis (CMA) and the real estate appraisal look alike, but can never be mistaken for twins! They are in the same family of documents that offer an opinion of value, but they serve decidedly different purposes for people who order, read, and rely on them.
The reports look similar at first glance, but have a different price tag, and are prepared by different professionals. A CMA is a multi-page report showing how a subject property compares with similar properties currently listed or sold. It is a free report usually compiled by real estate agents or brokers making a sales or listing presentation for buyers, sellers, or parties in a legal dispute. The CMA does little more than restate public information from the local Multiple Listing Service and the county recorder’s office. It does not include a physical inspection of the subject property, so it has limited appeal and is not always a reliable indicator of value.
Unlike the CMA report, a real estate appraisal is considered a good indicator of a property’s fair market value. It is expensive (depending on the property appraised) and extensive. It must be completed by a licensed appraiser, and it is always required by banks or mortgage companies when consumers are financing or refinancing property.
The real estate appraisal is a comprehensive report that offers not only comparative sale information on closed sales, but pictures, measurements, drawings, and public records information that culminates in an estimate of value. Licensed appraisers apply different approaches to determine value based on the type of property it is, and the official appraisal is a both science and art.
While opinions of value from two appraisers may differ slightly, the documented fair market values should be close, since licensed appraisers use similar tools, data and calculations to determine value.
Both the detailed appraisal, and its sister report, the comparative market analysis, are useful to consumers curious about a property’s worth. For quick reference and comparison shopping, the CMA is sufficient. When a new mortgage loan is required, only the appraisal will do.