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The Difference Between an Appraisal & Market Analysis

January 8, 2018

Buying a home can be one of the biggest purchases you will ever make in your lifetime. For most people homeownership can also be a dream come true experience.

I'm the mother of 4 children and I always tried to encourage each of them to dream. I would tell them, "a rocket scientist wasn't born being a rocket scientist. It requires lots of hard work but first it starts with a dream."

The same goes for buying a home. You certainly do not have to be a rocket scientist to buy a home but it does require gaining information and seeking guidance from a professional. That's what I'm here for. To empower you by providing the necessary information to help you make the best informed decisions and guide you along the way. You and I will work as a team to help you reach your dream of homeownership.

I look forward to working with you to "buy the home you love."

The Difference Between an Appraisal & Market Analysis

What is a comparative market analysis?

A CMA is an evaluation of recently sold homes that are within the area or location of the home that may be bought or sold. It’s usually performed by a real estate agent who has access to homes listed for sale or homes that have sold through their local MLS (Multiple Listing Service). It is not an appraisal.

What is an appraisal?

It is an estimate of the home’s market value by a licensed appraiser. A licensed appraiser has hundreds of hours of education training and has to serve an apprenticeship in order to become licensed. Real estate agents cannot perform an appraisal.

Appraisers use recent sales of homes that have sold in a certain radius around the home they are appraising. Appraisals are required by a lender to make sure that the home is worth more than the dollar amount of the mortgage loan.

If you want to purchase a home and it appraises for less than the sales price, the seller may lower the sales price or you have the option to increase your down payment, depending upon the lender requirements. The seller also has the option to cancel the deal — which means you may have to look for another home to buy.

If you are refinancing, an appraisal may be required too. If the value is less than your mortgage amount, you can cancel your refinance or put additional down to lower your original loan amount. Again, the lender will advise you of the dollar amount needed.

Appraisals are not an exact science — that’s why they may differ.

Changes in the market conditions (like a large company in the area closing their doors) can dramatically affect property values.

And, it doesn’t take into account things like “pricing it below market” in order to sell quickly.

The bottom line?

The CMA will give you a “good” idea of the value of homes, but an appraisal is the document needed by lenders to ensure that there is adequate collateral for the mortgage loan.

Check out our TVFCU Mortgage Center and current rates! 

Janet Sherman
Mortgage Advisor
NMLS  # 593714
Hixson Branch
423-634-3654 - direct line

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