A Home Appraisal Vs CMA: What Do They Mean?

When you plan to sell your house, you’ll undoubtedly encounter quite a few real estate terms. Some will be familiar if you’ve been through the selling process before. Others can seem like a different language altogether. Still others seem to make sense, but then it turns out it’s not at all what you expected or what you need at the moment.

Two terms that cause a lot of confusion are home evaluations and home appraisals. At first glance, they mean almost the same thing, except they’re done at different times by different people and for entirely different reasons. In this post, we’ll aim to provide some clarity around the concepts of appraisal value vs market value.

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What Is a CMA in Real Estate?

Just when you thought it couldn’t get more complicated, it seems we’ve thrown another term at you. Take heart, however; this one is actually simple. A Comparative Market Analysis (CMA) is just another phrase for a home evaluation.

This task is performed by a real estate agent when a homeowner is interested in selling or simply curious about what their property might be worth. The Realtor® will come to the house, often free of charge, and estimate the current value based on the size, condition, and location of the property.

After scrutinizing the physical attributes, the agent will then pull the latest reports from the real estate board and assess how much similar homes are selling for in that area. Based on all of this data, we can then give you an accurate number that you can use to build your home-selling strategy.

A CMA (or home evaluation) matters because pricing is a critical element in a successful sale. If you overestimate your property value, you’re not likely to attract the attention of serious buyers. If you underprice your home, you won’t earn as much as you should from your sale.

Planning to sell your house in Peterborough or Kawartha Lakes? Start by booking your free home evaluation with Jeff & Katie.

Property Appraisal Meaning in Real Estate

A property appraisal has many similarities to a home evaluation. A professional will come to the house and analyze its size and condition. The big difference is who performs this task and why.

An appraisal is performed by a certified appraiser, not a real estate agent. Often, they’re acting on behalf of the lender once a buyer places an offer on a home. The bank uses the appraisal to ensure they are not providing more financing than the house is actually worth.

Can you get two different results from an appraisal and a home evaluation? On paper, the numbers should be the same, or at least close. However, there can be a variance depending on how busy the market is.

When there’s excessive demand and not enough supply, the actual purchase price of a house can increase. Buyers compete with each other, and must often offer a higher amount for the seller to accept.

This principle of supply and demand is less applicable when it comes to an appraisal, however. The house is worth what the bank says it is, and they are often more conservative about appreciation over time.

If there is a discrepancy between the appraised value and the CMA, both the seller and the buyer must be careful. Since the lender will only authorize a mortgage based on the appraised value, the buyer will have to cover any excess out of their own pocket if they offer more.

Divorce or separation is another scenario where you might need a property appraisal rather than a home evaluation. This is the valuation used to split assets if one partner wants to buy out the other.

If you have a specific home-selling challenge, you’ll find practical advice in the posts below:

Something Else Altogether

There is one last term to throw into the mix. A property assessment is different from both an appraisal and a home evaluation. An assessment is performed by an official from the Municipal Property Assessment Corporation (MPAC).

An “unfairly” low assessed value works in your favour because this is the number MPAC uses to determine how much you owe in property taxes. The lower the number, the lower the bill. At the time of this writing, many assessments are significantly out of date, but we are not complaining.

Contrast that with the results from a CMA, where a high number reflects how much your home might sell for. In this case, the higher the better, as long as the value is not artificially inflated.

Once you have an accurate home value, you can work to enhance it through strategic preparation and staging. The posts below can help:

When Do You Need a Real Estate Agent?

A real estate agent has no influence over property assessments or appraisals, although we are happy to advise you on what the numbers mean and how they might impact your selling strategy. (If you live in an area with low property taxes, that could be a bonus that buyers love.)

If you are divorcing or separating, a real estate agent also cannot give you legal advice. You will need a good family attorney. However, we can help you with the practical aspects of the transaction, whether one partner is buying the property or you decide to list it on the market.

The CMA is where your Realtor® truly shines. By analyzing the data, we can determine the most effective listing price that will generate the maximum excitement in the market. This can lead to a faster sale, which also tends to result in the highest price.

If in doubt, call one of our Peterborough real estate agents. We are always happy to advise you on the situation. Reach out to 705-243-9797 or email team@jeffandkatie.ca to start the conversation today.