How much is a house REALLY worth? (Appraisal vs. CMA)

A home ultimately is worth what someone is willing to pay for it, right? Yes, BUT that doesn’t mean a house that’s listed for $899,900 is actually WORTH that amount! To determine a property's value, most people turn to either a formal real estate appraisal or the more informal comparative market analysis.

An appraisal is a Licensed Appraiser's determination of value for a home at a given point in time. Appraisers consider other recent homes sales (not listings) in the neighborhood, square footage, construction quality, design, floor plan, amenities, neighborhood and availability of transportation, shopping and schools. They also take lot size, topography, view and landscaping into account. Most appraisals cost about $400, and if you are financing your home purchase, the lender will require that an appraisal be done for the property you are purchasing. This helps the lender determine how much they are willing to lend in order for you to buy the home.

On the other hand, a Comparative Market Analysis (CMA) is a real estate broker or agent's opinion of a home's market value, based on sales of comparable homes in a neighborhood. The agent will take into account the same information that an appraiser does, but the estimate is less formal than a full appraisal, and doesn’t cost a buyer anything. Before writing an offer to purchase on a home you’ve found, I will prepare an analysis of what I believe that property to actually be worth. We can then use that information as a guide in presenting our offer to the seller.