What is a CMA, or comparative market analysis, not considered to be?

A comparative market analysis (CMA) is a tool used by real estate professionals to estimate the potential selling price of a property based on the sale prices of similar properties in the area. While it is a helpful way to gauge a property's market position, a CMA is not considered an official appraisal.

An appraisal is a formal assessment performed by a licensed appraiser that conforms to specific standards set by regulatory bodies. This process entails a thorough examination of the property, including its condition, location, and market conditions, to arrive at a definitive value. Appraisals use standardized methodologies and become legally binding in transactions, which differentiates them from CMAs.

CMAs provide valuable insights for pricing a home but lack the rigor and authority of an appraisal. Property assessments generally refer to evaluations conducted by local governments to determine tax liability and are also distinct from the function of a CMA. Additionally, while a CMA might aid in investment analysis by helping investors understand market trends, its primary purpose is not to analyze investments rigorously.

Understanding this distinction reinforces the notion that while CMAs are useful for estimating values in real estate transactions, they do not have the legal standing or comprehensive analysis that an appraisal offers.