What's the difference? Appraisal vs Comparative Market Analysis (CMA)

Okay, this is a great question. If you have received a piece of mail from an agent offering to give you a price for your home for free then they are offering a comparative market analysis. This is not an appraisal. An appraisal can only be completed by a licensed appraiser. The appraisal value is used by lenders to establish the amount a buyer is approved for. The key difference is a CMA establishes a home's price, whereas an appraisal establishes its value—price is what you pay for something while value is what it is worth.

How is a CMA completed?

A CMA is research done by a real estate agent to determine the price of a specific property by evaluating similar ones (comps/comparables) that have recently sold in the same or similar area. 

Does a CMA have a cost?

Most real estate agents and brokerages on Long Island offer free CMA's. The cost of a CMA is ... more below on this. 

What does a real estate agent look at when creating a CMA?

A real estate agent is trying to find homes that most closely compare to the prospective seller's house- namely bedrooms, bathrooms, acreage. Here on Long Island, comparing houses within the same school district is one of the most important elements. 

What should you beware of?

Now, you do not need to beware of all of CMA's ... just the ones that give you a price sight unseen.  Just like you would not want a doctor to perform surgery without knowing what part of the body they were working on, you would not want to receive a CMA from an agent that has not personally seen your house. They would know what updates and upgrades etc that have been done. These changes or lack there of could really impact a prospective sellers homes sales price.

Getting back to the cost of a CMA... the cost is time. To get the most accurate price, an agent should ideally see the property in person. This should take just about 20 minutes (typically less). From there the agent looks at the homes that sold in the recent past and pulls together the ones that most closely equate. From there...  it is time going over the CMA. It's ultimately up to the prospective seller to determine how they would like to receive the CMA. Some agents like to give a presentation to go over the comps so any questions are answered at once. A CMA can be sent and a prospective seller can review and ask any questions later. 

Can you still receive a list of comparable homes without getting a full home valuation?

Yes absolutely, a seller can receive a list of comparable homes for their knowledge. 

Can a prospective seller do their own CMA?

A prospective seller can absolutely start their own due diligence. With ease of access to so much information, every person can be their own investigator. However, unless real estate is a prospective sellers main job then they will not know the nuances of the market. Nuances could include current preferred home styles (those midcentury modern homes fly off the market - could not be said 10 years ago), the return on investment to an upgraded kitchen or addition of a pool, homes that have sold privately off the MLS or reasons why a home sold quickly/slowly or for a particular price.

Can you use a CMA from 6 months ago to determine a listing price today?

No. CMA's are time sensitive. The prices from one month to another can vary greatly. Any thing from homes on the market, change in interest rates and seasonal activity can impact what a seller could get for their home.

Is an agents CMA their final suggestion for listing price?

Okay, so we have trouble answering this because there may be some agents who may give the CMA and that is their final answer. At Lucky To Live Here Realty, we believe that listing a property is a team effort. We want to take into consideration what the market is telling us but also what our prospective clients are telling us. Giving a CMA/listing presentation is about educating our prospective clients on what the market is currently dictating. 

So the shortest answer here is... prospective sellers should interview multiple brokerages and see what the brokerage and most importantly what the agent can offer them.