What you need to know about current market appraisals (CMAs)

It is important to provide accurate appraisals so vendors can make well-informed decisions about selling their property or business. A number of the complaints and enquiries we receive raise concerns about current market appraisals (CMAs).

Appraisals are required for all listings

You must provide an appraisal to any prospective client - residential, rural or commercial - before they sign an agency agreement. Rules 10.2 and 10.3 of the Code of Conduct 2012 set out the requirements for appraisals. Appraisals must be backed up by comparable sales data. Where there is no directly comparable or even semi-comparable sales data available, you must explain this in writing to your client.   ​

Appraisals should be analysed for the vendor

It is not enough to simply present the prospective client with a list of properties or data collected. ​A licensee acting with sufficient skill and care will explain how the property compares to other recent sales, and how they have arrived at the appraised figure. You should explain why you have included some properties for comparison and be able to explain why you have excluded others. This is captured in CAC Decision CA5147724​.  

The complainant in this case alleged the market appraisal was misleading and inflated.  On the basis of the appraisal and the advice from the licensee, the complainant entered into a sole listing agreement with the agency.  In their decision the Complaints Assessment Committee stated:

The Committee accepts that the production of a CMA is not an exact science; that it is not a valuation and should not be treated as such.  A CMA is usually the first step in a contract between a vendor and a licensee and, as such, plays a major role in whether a vendor decides to list his/her property with a particular licensee.  Therefore, the committee believes care and effort should be taken with the production of the CMA

The committee stated they saw simply a presentation of data collected with no evidence of analysis by the licensee. This left the report open to being interpreted incorrectly by the seller.

Licensees must view the property

A licensee may breach rule 5.1 of the Code of Conduct 2012 if they do not visit a property before appraising it.

Unless there are exceptional circumstances and these have been fully explained to your vendor client, it is expected that a licensee will access the property they are appraising and ensure they have fully inspected the property before finalising the appraised amount. This is reinforced by the Real Estate Agents Disciplinary Tribunal’s decision in C04775​. REAA is aware that some agencies have a practice of not physically inspecting the property they are providing an appraisal for, and REAA will be looking in to these further. 

The appraisal should reflect current market conditions

We hear from vendors who have listed with a particular agency after receiving a very positive appraisal. Shortly after listing the property, the licensee has begun to point out issues with the property and push for them to reduce the price. An over-inflated appraisal range may be a breach of rule 6.4 of the Code of Conduct.

Many vendors will have an idea of the value of their property or business based on what they have heard or observed, but this is not always realistic. A robust and thoroughly analysed appraisal will help manage vendor expectations. 

If the parties are renewing the agency agreement (refer to section 131(2) of the Act) the licensee must provide the client with a new, current appraisal.


The appraisal amount also serves as an important tool in providing the vendor with an indication of how much commission they may be charged as a result of a successful sale. This is set out in rules 9.9 and 10.6 of the Code of Conduct.

Questions about this article? Call our enquiries team on 0800 367 7322 or email info@reaa.govt.nz​.