You are currently viewing Appraisal vs. Comparable Market Analysis: What is the difference?

Appraisal vs. Comparable Market Analysis: What is the difference?

Before deciding to sell their houses, most home sellers in the Treasure Coast (St. Lucie, Martin, Palm Beach and Indian River Counties of Florida) want to know the value of their homes. Home sellers have a few options to help determine what price they might be able to put their house:

  • Automated Home Valuations
  • Comparable Market Analysis
  • Appraisal

What are the differences between them and how might they help a home seller to decide what their house, townhome, or condo might be worth?

Automated values are limited guesses by an algorithm 

Some home sellers may start with one of the popular real estate sites that will do an automated guess of value.  But the algorithm is highly limited in what it can consider.  

It can take into account only the hard factual data like price per square foot, number of bedrooms, or anything else available from public data.  

Woman checking automated valuation tools

A computer-generated value cannot take into account things that only the eye can recognize for value:

  • that your roof is in need of replacement,
  • that some windows are broken, and
  • that your dog has torn up your backyard.
  • that your scalloped bathroom sinks are 30 years out of date.
  • that your landscaped yard, outdoor living spaces, and sprinkler system add a sense of value. 

A CMA is done by a licensed real estate agent

Real estate agents use a comparable market analysis (CMA) to figure out the value of your home.  It is an estimate of your home’s current value to establish the possible list price for your house.  It is a reference point.

Unlike automated valuation tools, a CMA by a real estate agent can provide the customization that requires local knowledge of market conditions, what buyers are looking for in their home, as well as the eyeballs to see the condition of your property and competing properties.   

I use the Multiple Listing Service, which pools information on all the properties listed by other agents.  The MLS is available only to real estate agents.

To do your CMA, I look at recent comparable and pending sales as well as how fast or slow the time it takes for houses to close.  I’ll also look at the physical condition of your property.  All of these conditions that a computer cannot detect will influence how much you might be able to list your house for.

I will also look at properties that are similar to yours that are currently listed to see what features of your property stands out.  Active listings are homes currently available for sale.  From the pictures, I can compare the condition of your house relative to others on the active market.   Expired, withdrawn, or canceled listings will also show what buyers were not willing to pay for in the present market.

Automated valuation tools cannot do this.  

A CMA  is not an appraisal.

Appraisals are done by licensed appraisers 

Appraisals are typically done by the lender when someone is looking to buy a home.  Appraisals are done only by a licensed real estate appraiser. 

A buyer who is getting a loan will be required by the lender to pay for an appraisal.  The appraiser visits the home as a neutral third party with no vested interest in the outcome of the sale.  

Woman Jeans Sweater Clipboard making notes at a home

Agents and lenders both use recent sales, pending listings, and housing inventory to come up with a value. 

However, the lender is typically looking in the rearview mirror; agents are considering where the market is moving and how the trends are changing. 

Because of this, there can be a discrepancy between a home’s appraised value and purchase price.

Typically, sellers get a CMA from a real estate agent to help determine a listing price, and buyers pay for an appraisal as part of their loan process. 

The best tool to determine what your home is worth

Ask me for a CMA on your Port St Lucie home, or your property anywhere in the Treasure Coast.  

When you price your home based on the information suggested by the CMA, chances are good that the appraisal the buyer pays for will support the price agreed to. 

As a seller, you could price your home higher than the CMA, but it might just sit there for a while. 

If you’d like to learn the value of your home, or if you have any questions related to real estate in general, feel free to reach out to me. I look forward to hearing from you soon.