In a slow housing market, an appraiser is often the bearer of bad news. And these days, the bad news is that the value of a home will drop if the market remains slow.

“Appraisals are coming in lower than six to eight months ago,” said June Minton, a real estate agent with Coldwell Banker Howard Perry and Walston in Chapel Hill. “As time goes by, we’re going to see appraisals a little lower than the sales price.”

Those appraised values can drive home owners up the wall.

“Some owners think a home is worth more,” said Todd Hofer, of Hofer Appraisal Group in Raleigh.

An appraisal is required by lenders to determine the value of a home and is an opinion of a home’s fair-market value — what a willing buyer and a willing seller will pay. An appraiser develops the estimate of value on a home (the subject) by comparing it to the most recent and comparable home sales in the neighborhood or surrounding market area. They look for three recently sold homes that are similar in age, condition, amenities and any improvements done to the houses.

Positive and negative adjustments can be made to the sales prices of these properties based on how they compare to the subject. What results is a range of adjusted sales prices from which the final estimate of value is determined. Most appraisals are completed within three to five days and cost the borrower $300 to $350.

“It helps us, as a lender, determine our risk,” said Andrew Kerr, senior loan officer with Coldwell Banker, Howard Perry and Walston in Chapel Hill.

Banks and mortgage companies are more likely to provide competitive loans to homebuyers who make larger down payments. Even on low-risk loans, where the buyer pays a hefty down payment, a visual inspection is required. Kerr said comparison houses need to be less than two miles away from the subject, similar in size and sold within the last six months.

“We want there to be comparable houses in the recent vicinity,” Kerr said.

The slowdown in the housing market also has meant that there are fewer homes for appraisers to look at.

“We’re down 4 percent from last year,” Hofer said about his appraisal business. “Our numbers are soft.”

Real estate agents are even looking at comparable homes that sold a long time ago in other communities.

“In [some] neighborhoods we have to go back further than six months,” Minton said. “If we can’t find one in your neighborhood, we find a similar one in another neighborhood.”

It’s a bizarre market, Hofer said.

“It’s very location sensitive,” he said. “Certain areas are pretty soft, and certain areas have multiple offers on homes. If a lot of properties are available at about the same price as yours, the more difficult it will be to sell your home.”

“It’s very competitive right now,” Minton said. “The buyers are calling the shots.”

While most homes sit on the market for months, real estate agents can use appraisal information to help sellers get an edge in the market.

Agents are pricing houses conservatively and instructing their clients to upgrade. In certain areas around the Triangle, a home sells more quickly if the inventory of similar for-sale homes is low.

Peg Shanley, an appraiser with Tate-Mosher Appraisal Group, said the value of a home is determined by the current housing market and the condition of other homes in the neighborhood.

“The neighborhood you live in has a price ceiling,” Shanley said. “Your house will sell at a similar price to other homes in your neighborhood.”

If the market remains slow, the value of homes will drop.

Shanley said home improvements make a big difference to buyers and appraisers alike in a slow market.

“If you have not kept up with repairs and updates, your home will sell for less,” she said.

These days, homebuyers want to see hardwood floors, granite countertops in the kitchen, and tile in the bathroom. Appraisers give higher value to homes with upgrades than homes with the original items, like plastic tubs and Formica cabinets.

“Keep up with the expectations of the neighborhood,” she said. “If your home is specific to your needs, the average buyer won’t want it.”

Although a seller should repair things that aren’t working, like an air conditioner or heating system, Minton cautions against spending money on renovations that won’t make a first impression with buyers.

“Buyers usually can’t see a roof,” she said. “Unless it looks so bad and is leaking, a seller wouldn’t get [his] money [back by replacing it]. Basic cosmetic improvements like carpeting and wall painting are the least costly. A home gets its money back and shows better and for a higher price. New light fixtures and faucets usually have a 100 percent return.”

“An appraiser doesn’t care if [the home] is decorated,” Minton said. “But a buyer will choose that home over another.”