If you've looked through any real estate books you will have seen the words Competitive Market Analysis (CMA). Real Estate Professionals often offer a free CMA as part of their services for anyone interested in selling their home.
To explain what a CMA is, first lets explain what it isn't. A CMA isn't the same as a formal appraisal. A formal appraisal is "the act or process of developing an opinion of value." It is not a guarantee of value but it is an opinion that can be justified through verified data. In Texas you must complete licensing and certification requirements to become a licensed appraiser. The Texas Appraiser Licensing and Certification Board oversees these requirements. A formal appraisal is completed on a Uniform Residential Appraisal Report. Formal appraisals will be used by mortgage lenders, investors, government agencies, and individuals in assessing the value of real estate.
Okay, so back to the CMA. What is a CMA? The definition of a CMA is "an analysis of market activity among comparable properties; it is not the same as a formal appraisal." Often a real estate agent will be asked to determine a market value of a property without a formal appraisal being done. Let's talk about "market value" for a minute. Market value is the most probable price a property should bring in the market. Market price on the other hand is what a property actually sells for. So, if you are still following along, a Realtor when preparing a CMA is going to come up with a market value for a certain property by looking a the market price of what other similar properties have actually sold for.
The CMA will include information on homes in the same or nearby neighborhoods, that are similar to yours, that have sold in the past 6 months. It will also include information on homes that are currently for sale, and homes that were for sale but have expired without selling. It will give a range of value not an exact value. This tool can be very helpful for sellers in estimating how much money they will get from the sale of their homes.
If you are thinking about selling, take a real estate professional up on their offer to provide you a CMA. You'll gain some helpful knowledge about your neighborhood, your home, and the price that you could sell it for.