What's the Difference Between a CMA and a Home Appraisal?

When you are selling a home, you could get lost in real estate jargon, especially if you are a first-timer. One potentially confusing aspect of the real estate transaction process is the difference between a competitive marketing analysis (CMA) and a home appraisal. Both reports are important in the home selling process and, while they are similar, they have some very big differences.

A CMA is an agent process

A competitive marketing analysis is a process your real estate agent will perform in order to get a good idea of an appropriate listing price for your home. A CMA is typically a free process offered by your selling agent.

A CMA evaluates recently sold homes that are similar to yours (often called comps). Real estate agents will gather this information from the multiple listing service (MLS), which has essentially pooled information on for-sale listings from other agents. It’s important to note that the MLS is only available to real estate agents, which is part of what making listing your home FSBO (for sale by owner) so challenging.

When doing a competitive marketing analysis, your agent is looking at homes that are similar to yours in size and features. The CMA lists information on properties currently on the market, pending properties, sold properties and expired properties. The CMA will also list a low, median and high price for your home as well as an estimated average number of days on the market. Though a CMA isn’t an exact science, it can get you pretty accurate results of what a good list price is.

Appraisal is a bank process

The home appraisal process happens once a buyer applies for a loan to purchase your home. After the buyer submits an offer and requests a loan, the bank arranges for a licensed appraiser to visit your home.

This is the biggest difference between a CMA and a home appraisal: a licensed appraiser has to be state certified or state licensed. Even though the bank initiates the home appraisal process, the home appraiser is a neutral third party with no vested interest in the outcome of the sale. They are there to report observations and facts about the home to determine fair market value.

The bank just wants to make sure it isn’t lending too much money for the home, which is why they hire the appraiser. The appraisal will contain information about the home’s condition, recent information about similar listings, and information about the home’s neighborhood.

Another big difference between a CMA and an appraisal is that you can more or less prepare for an appraisal. You can make sure that everything in your home is in working order by fixing any obvious flaws and making sure that the house is up to date. While you can’t completely predict what the outcome of an appraisal will be, you have more control over it than what a CMA will conclude. A CMA and an appraisal are different processes, but both help you to get you accurate and up-to-date information about how much your home is worth.