Comparative The comparative approach, the most common, compares the recent sales prices of neighboring homes that are similar to the house being appraised. The appraiser first makes adjustments for variables such as size, number of rooms, condition, age and location. Then the appraiser evaluates environmental influences such as noise and air pollution as well as more abstract factors such as encroachments, zoning violations and easements. Although software is available to aid this process, appraisal is inexact and remains more of an art than a science. The appraiser must reconcile the accumulated data and justify the assignment of a particular dollar value to the property.
Appraisers typically round off figures because appraisals are only estimates of market value.
It's an informal home valuation many brokers offer free to home sellers as an incentive to choose them as the listing agent. Competently prepared CMAs closely reflect appraised values. Also, the seller may agree to a clause in the purchase contract allowing the buyer to cancel the deal if the appraisal falls short of the purchase price. In any event, request a copy of the appraisal from the lender. If the loan falls through because of the appraisal, you are entitled to know why.