Comparative market analysis versus appraisal
Two documents put a number on a property: the comparative market analysis (CMA) a licensee prepares, and the appraisal an appraiser issues. They can look alike, but the law treats them very differently. This lesson covers the concepts only. Unit 15 teaches how value is actually estimated.
Comparative market analysis
A CMA is a licensee's estimate of the price range a property is likely to sell for. A sales associate typically builds one by looking at similar properties in the same market: what recently sold, what is for sale now and what failed to sell. Listing agents use a CMA to help a seller pick an asking price; buyer's agents use one to help a buyer decide what to offer.
Florida expressly allows this. Under Fla. Stat. 475.612(3), the appraiser-licensing section does not apply to a real estate broker or sales associate who, in the ordinary course of business, performs a comparative market analysis, gives a price opinion or gives an opinion of value. The catch: it may never be referred to or construed as an appraisal.
Appraisal
An appraisal is the process of determining the value of a property (Cornell LII Wex). In Florida, appraisal services are provided by appraisers credentialed under Chapter 475 Part II (475.611(1)(a)). An appraisal report is any communication, written or oral, of an appraisal analysis, opinion or conclusion of value, whatever it is called; but to be recognized in a federally related transaction, it must be written (475.611(1)(e)).
Under 475.612(1), only a person certified, licensed or registered under Part II may issue an appraisal report or use titles such as "certified real estate appraiser." Credential levels include:
- Certified residential appraiser: qualified to appraise residential property of one to four units, without regard to transaction value or complexity (475.611(1)(l)).
- Certified general appraiser: qualified to appraise any type of real property (475.611(1)(k)).
Side by side
| CMA | Appraisal | |
|---|---|---|
| Prepared by | A broker or sales associate | A Part II appraiser |
| Purpose | Help a seller price or a buyer offer | An independent opinion of value, often for a lender |
| License required | Real estate license (475.612(3) exemption) | Appraiser credential (475.612(1)) |
| May be called an appraisal? | No | Yes |
A real estate licensee is paid when the deal closes, so a CMA is a marketing and advice tool. An appraiser is meant to be an unbiased third party.
Exam tip: A CMA, a price opinion and a broker's opinion of value are all fine for a licensee. Calling any of them an "appraisal" is not.