Understanding an Appraisal
Q. Is a Comparative Market Analysis an appraisal?
A. Appraisals and Comparative Market Analysis are similar but have different purposes.
When a home is sold, the buyer's mortgage lender will order an appraisal of the 'subject' property. This is done to make sure the home is worth the amount being mortgaged.
A Comparative Market Analysis (CMA) is the tool used to determine a listing price for the subject property. It, too, compares the subject to several other recent sales and listings to arrive at an asking price for the home. The difference is that a CMA is a tool of the seller or the seller's agent, not the lender, and it is less detailed. Well-researched CMAs net list prices very close to appraised values, but lenders do not accept them as proof of the property's worth.
· Appraisers are licensed.
· The appraiser should be an objective party.
· The buyer assumes the cost of an appraisal.
· Appraisals are somewhat subjective; four different appraisers may arrive at four different property values.
Appraisal reports are quite detailed. A few major components are:
One of two methods generally used to appraise residential properties are:
construction. Building costs (present and known) are calculated to arrive at a replacement value for the subject home.