An appraisal is a supported, defended estimate of of value of property rights as of a given date. Appraisals must be performed under specific Federal Rules, and in most cases must be performed by a Florida Certified Appraisers. A formal appraisal uses 3 approaches to value: cost, market and income. Appraisers usually make detailed analysis of the dollar adjustments necessary to reflect the differences in property characteristics. Appraisal reports can be lengthy and very detailed, and they can cost from a few hundred dollars to a few thousand dollars, depending on the amount of work and research that the appraiser has to perform.
A CMA or Comparative Marketing Analysis is an informal approach to price real estate property where real estate brokers show 3 categories of properties to arrive at an estimated price:
- Properties Sold within the previous 6 months
- Properties currently on the Market
- Expired properties during the previous 6 months
A CMA provides a limited number of market data approach, and it often provides the parties to a transaction with a range of values.
Real Estate Brokers can prepare CMA’s based on their market knowledge to help sellers to establish a listing price, or to help buyers to establish an offering price. A CMA is an adequate method to estimate the values of small residential properties (4 units or less). CMA’s are not effective to price commercial properties or larger residential income properties.