Certified Appraisers

Should I Get a Real Estate Appraisal or Market Analysis?

The process of estimating the value of your home can be done by a real estate appraisal or a marketing analysis. A professional appraiser does an appraisal, while a local real estate broker or agent does a market analysis. They have similarities, but also important differences, especially in their application.

A New York State Certified Appraiser has a license that demands a required education, experience and a written test. A Real Estate Agent or Broker does not.

Formal Appraisal

The appraiser can use three different methods or approaches to value your property: market, cost and income. The market approach usually yields the most appropriate and relevant valuation for a typical home over a few years old. This approach compares your home to very similar types of homes that have recently sold in the immediate geographic area, to base a value on a going market price. The market value is the most reliable in the residential home market.

Market Analysis

The heart of a market analysis is the appraisal market approach. The broker or agent will research other similar homes in your neighborhood that have recently sold and also those that are up for sale. These similar homes are known as comparables or comps. The agent will also analyze how long it took to sell the other homes or how long they have been on the market. This is similar data that the Certified Appraiser uses. However, you do not know how long the broker or agent has been licensed and if they have any formal training.

Advantages and Disadvantages

The major disadvantage is that the agent has a vested interest in getting you to list your property with him and to maximize the value of your home. A professional appraiser is an unbiased third party and should be the most objective. Another advantage for the marketing analysis is that the local real estate agent might have inside knowledge regarding your neighborhood that the appraiser does not. This is another reason to hire a local experienced Appraiser. A CMA from an Agent/Broker is free an Appraisal costs money.

Other Considerations

The choice between using an appraisal or marketing analysis is basically only applicable for selling your home, so you have an idea what price you should ask for or accept. For any other purpose, such as securing a mortgage, a valuation for insurance purposes or other legal reasons, you will usually need an appraisal. Also, a market analysis does not use the cost or income approaches to estimating value. The cost approach can be important if brand new homes are in your area for sale competing with yours. The income approach would be useful if your home can be a viable rental property.

The banks rely upon Licensed Appraisers to appraise homes for financing purposes because an Certified Appraisal is more reliable and accurate than a CMA.