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When it comes to things you should anticipate during an appraisal, it is important to understand the appraisal is based on the average of three common methods, including comparable sales, cost or replacement methods and the income approach or how much the property would be worth as a rental property.

Many homeowners might not realize that an appraisal takes the average of all three methods into consideration when coming up with the value of your home. While the cost approach might give a higher outcome because of higher lumber costs, comparable sales are based on what homes in the area are selling for and that can offset gains from a cost approach number. The other thing to consider on the income approach is what the average home is renting for per month, and this number might be lower because there is a glut of rental homes due to troubled homeowners, which can lower rental income.

When you consider that your appraisal is based on three methods and the average, then you have to consider what that number turns out to be when two of them are considerably lower, even if the cost approach turns out to be sufficient. The main thing that can affect the cost approach is that materials might be higher, lot prices might be lower and in some cases, substantially lower, so there could be a triple effect on the final appraised cost of your property.

There might not be too much you can do to change the appraisal price, other than making your home in the best condition you are financially able to do. As you can see, market conditions can greatly affect the appraised value of your home, but you can get additions for improvements and extra usable space that will put your home at the higher end of the home prices in your market.

Many real estate agents will use a comparative market analysis or a CMA to determine a price estimate of homes that are on the market or have recently sold. There is still no guarantee that your home will make it through the scrutiny of the appraiser unless it is in the best condition and offers additional features that recently sold homes don’t offer. Most real estate agents will take these things into consideration when pricing your home because they know appraisers have the final word on whether a home sale goes through or not.

If the appraisal doesn’t come out to be enough, you might find yourself having to lower what you will take or risk losing the sale. In most cases, buyers aren’t willing to pay more for asking prices that are above appraisal because it is an instant loss of equity that they will have to come up with extra cash to cover. An appraisal that doesn’t come out can be a major stumbling block to a home sale, in the majority of cases.

The only solution might be to list your home based on comparable sales or the CMA and make sure your home is in proper repair and shows the best it can, even when the appraiser comes. Appraisers are human, so if your home looks superior to others in your comp set, it can yield you the best appraisal.

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