Current Market Analysis VS Appraisal

What is the difference between a “CMA” and an appraisal?

Are you ready to sell your Northern Michigan home?

One of the first steps in selling your home is speaking with a Coldwell Banker Fairbairn Realty agent. We’re often asked what the difference is between a Current Market Analysis and an appraisal. These terms are not interchangeable.

Our agents are trained in providing high-quality and accurate Current Market Analysis reports (also called home equity reports) at no cost and no obligation to you. What is a Current Market Analysis (CMA)?

A CMA is an estimate of market value for your home. Your Coldwell Banker Fairbairn Realty agent will compare similar homes (also known as comparables) to your own. Your agent will use criteria such as location, age, size, and condition, among other similarities, to determine a potential range for a list and sell price.

Keep in mind, markets change.

In the recent, pandemic market, many home values were up over 20% of their previous market value (2020- 2021). This is because of the basic economic principle of supply and demand. The supply of homes on the market was historically low but demand was historically high. Today, values are creeping back down but not at the same rate that they increased. Your agent will know how to look at recent sales to determine the correct price range for your home.

Finally, the market value of your home will ultimately be determined by how much you want to sell for and how much a buyer is willing to pay.

That’s a Current Market Analysis. So what is an appraisal?

An appraisal is completed by a licensed appraiser. Typically, appraisals are done at the request of a buyer working with a mortgage lender or when a homeowner is refinancing their mortgage. The appraisal is done so that the lender can verify the value of the home they are extending themselves for. Appraisals are very similar to Current Market Analysis reports in that they too, are meant to determine the property’s fair market value (FMV). These reports, however, are done to determine a singular price, not a range. Also, a residential appraisal will cost several hundred dollars.

In Northern Michigan, it is important to note that location is very important in conducting either of these valuations. A home on the Inland Waterway, for example, will be very different in value from a home not on the water, even if they’re both in the same geographic region of Alanson. On-water versus off-water matters. Further, a home on Crooked Lake is not going to be similar enough to a home on Burt Lake to compare for a value, nor is a home on Lake Michigan similar enough to a home on Lake Huron or any home on the Inland Waterway. And again, this is true for homes in Alanson versus Harbor Springs or Petoskey. They are just not similar enough geographically to be used as comparables.

Sometimes, a home is listed for sale that has never been “on the market” before. Or, a home comes on the market that is so unique, that there are no comparables. These are both good reasons for requesting an appraisal before listing the home with your Coldwell Banker Fairbairn Realty agent. The appraiser will have the ability to pinpoint a suggested sale price.

Do you want to learn more?


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