Comparative Market Analysis, CMA, appraisals, listing price, and marketability
One service we as real estate agents are able to provide, is a comparative market analysis or CMA. These are not appraisals and can not be used as such. Banks do not use CMA's only appraisals. CMA's are developed similar to an appraisal but an appraisal tries to determine a single number value of a property. The CMA on the other hand looks at the current market to estimate a probable price range at which the property might sell.
For example, an appraiser might determine that the value of a property is $250,000. On the other hand, a CMA might give a range of $240,000 to $260,000. If the seller is in a hurry he might want to price at the low end of the range or even lower. Conversely, if the seller wants to get top dollar out of property and will only sell it he can get top dollar - he might price near the top. One has to be careful not to over price when establishing a listing price because the property will simply get passed over - people will not even look at it. And, the time on the market will be wasted.
Also, the marketability, and in turn the CMA, for example, could be significantly effected by the short-term circumstance, that three similar houses located in close proximity are currently for sale or that a nearby foreclosed property is listed (dumped) below appraisal. The temporary situation may not have an effect on the long term "value." But, in this case, if one wants their house to be sold first, they might need to price it lower in the range or even below the range. Similarly a new paint job or the lack of one can have a significant impact on the curbside appeal and marketability. If one wants to sell their property but does not want to properly "polish-up" the property before putting it on the market, it would be wise to set the listing price lower to make it more attractive to potential buyers.
CMA's are more often thought of in the context of selling, and, in fact, CMA's are frequently utilized where the real estate agent or Realtor® is advising his seller client. But, CMA's can be and are frequently utilized by a potential buyer to help them in determining what they might want to offer for a property. Whether a buyer or seller a CMA is a valuable service that a Realtor® can provide their clients.