Understanding how appraisals work will help you achieve a quick and profitable refinance or sale. An appraisal is a professional opinion of the value of your home based on what similar homes in your area have sold for in recent months.

An appraisal isn't an exact science – it's an appraiser's best opinion based on how the home's features stack up against those of similar homes recently sold nearby. One appraiser may factor in a recent sale, but another may consider that sale too long ago, or the home too different, or too far away to be a fair comparison. The result can be differences in the values two separate appraisers set for your home.

Also, appraisals can serve more than one purpose. An appraisal being used to insure your home or to determine your property taxes may rely on other factors and arrive at different values. For example, though an appraisal for a home loan evaluates today's market values, an appraisal for insurance purposes calculates what it would cost to rebuild your home at today's building material and labor rates, which can result in two different numbers.

A competitive market analysis is different from an appraisal. In a CMA, a real estate agent relies on market expertise to estimate how much your home will sell for in a specific time period. The price your home will sell for in 30 days may be different than the price your home will sell for in 120 days. Because real estate agents don't follow the rules appraisers do, there can be variations between CMAs and appraisals on the same home.

Home prices shift, and appraised values will shift with those market changes. Your home may be appraised at $150,000 today, but in two months the appraised value could be lower or higher depending on how your market has performed.

If your home appraisal comes back at a value you believe is too low, you can request that a second appraisal be performed by a different appraiser. You, or potential buyers if they've requested the appraisal, will have to pay for the second appraisal. But it may be worth it to keep the sale from collapsing due to a faulty appraisal. On the other hand, the appraisal may be accurate, and it may be a sign that you need to adjust your pricing or the size of the loan you're refinancing.

Your Realtor® can help you through the transaction, and also be your advocate if an appraisal is faulty.  Find a local Realtor® at easternctrealtors.com.