Current Market Value

• The current market value is what a ready, willing and able buyer might pay in the current market. Real estate professionals use sales data from recent sales of comparable properties in the area to estimate a property's current market value. In a short sale, the property sells below the outstanding balance of the loan, and it may sell at, below or above the current market value.
  
  

Appraisal

• Before a lender approves a short sale, it typically demands an appraisal, broker's price opinion or comparative market analysis of the property. Of the three, the appraisal is more expensive and more comprehensive. A licensed or certified appraiser prepares an appraisal. A real estate broker prepares a broker's price opinion for a fee. The licensed real estate agent typically prepares a comparative market analysis for a prospective client at no charge.
  
  

Inspection

• The purpose of a home inspection is not to determine the value of the property, but to identify any necessary repairs. During an inspection period, the buyer typically has the right to request specific repairs, and the seller might agree or refuse. If the seller refuses to make the repairs, the buyer can cancel the offer. In some cases, an inspection that uncovers a significant amount of needed repairs may lead to a lower price.
  
  

Result

• The final outcome of an appraisal can bring down the value of a home, in that it may be less than what the property appraised for at a previous date or lower than the price for which it originally sold. The purpose of an appraisal during a short sale is to determine if the property has dropped in value, and is now worth less than the loan amount. There is no guarantee that a home won't sell for more or less than its appraised value. If the appraisal shows that comparable homes sold at prices lower than what you initially believed your home to be worth, then the results of your appraisal will in essence bring down the value of your house.