Choosing a Valuation Tool: CMA vs. AVM
By Emily Williams, RET Content Coordinator
Posted by: RET Staff
CMAs and AVMs are both valuation tools. Let's look at each of them more closely to clearly understand the difference.
- Competitive Market Analysis (CMA). A CMA is generally used to aid in discussions about the value of an owner's property and the best potential list price. The key here is that the agent prepares the CMA, providing comparable recent sales and their own personal recommendation for listing price. The recommended listing price is based on the comparable homes and the agent's own insights.
- Automated Value Model (AVM). Already, you may have spotted the key differentiator between a CMA and an AVM – an AVM is automated, meaning that the agent's role in creating the AVM is passive. AVMs rely entirely on mathmatical models to produce an estimate of the value of a home, rather than adding an agent's insights. Many AVMs are available directly to consumers (Zillow's Zestimate is one example of a frequently-used consumer AVM).
Now, there's a lot of variation between the products within each of these categories as well. In order to better understand what they do, we talked to a few of the companies that specialize in this area.