An appraisal is a formal opinion of a property's market value conducted by a licensed, independent appraiser. Lenders require appraisals to ensure the property provides adequate collateral for the loan. For investment properties, appraisers may use the sales comparison approach (comparing recent comparable sales), the income approach (capitalizing the property's income), or the cost approach (estimating replacement cost minus depreciation). Low appraisals are a common obstacle in investment deals, potentially requiring renegotiation, additional down payment, or a different lender. Investors should understand how appraisers evaluate properties and be prepared to provide supporting data.