Comparative Market Analysis (CMAs), Automated Valuation Model (AVMs), and appraisal are different methods used to determine the value of real estate, but they have distinct characteristics:
1. Comparative Market Analysis (CMA):
- Methodology: CMA involves analyzing recent sales of similar properties (comparables) in the same area to estimate the value of a subject property.
- Data Source: Real estate agents typically perform CMAs by looking at recent sales data from the local Multiple Listing Service (MLS) and considering property features.
- Accuracy: CMAs provide an estimate rather than an exact value. They are often used by real estate agents to help sellers set an appropriate listing price.
2. Automated Valuation Model (AVM):
- Methodology: AVMs use computer algorithms and statistical models to assess the value of a property. They may consider various data points, including recent sales, tax assessments, and property characteristics.
- Data Source: AVMs rely on large databases and advanced analytics to generate property valuations automatically.
- Accuracy: AVMs provide quick and automated estimates, but their accuracy can vary. Online real estate platforms use them for preliminary assessments.
For more information see this article on The Balance.
3. Appraisal:
- Methodology: An appraisal is a comprehensive and in-depth assessment of a property’s value performed by a licensed appraiser. They will perform an on-site inspection, consider comparable sales, and other relevant factors.
- Data Source: Appraisers gather information from multiple sources, including public records, recent sales data, and direct observation of the property.
- Accuracy: Appraisals are considered more accurate and reliable than CMAs and AVMs. They are often required in real estate transactions, refinancing, or mortgage applications.
In summary, while CMAs and AVMs provide estimates, appraisals offer a more detailed and accurate valuation conducted by a licensed professional. The choice between these methods often depends on the specific needs of the situation and the level of accuracy required.