I found out years ago that the most popular of all small talk is about real estate home values. "What's it worth?" must be the most often asked question in the world of real estate. And anyone venturing a guess, based on almost any data, or even none at all, is instantly the center of attention in any discussion.

Unfortunately, there is one problem with all this speculation: one can never know exactly what one's home is worth until it is placed on the market, given a full exposure, and finally, been placed under a negotiated sales contract by typically motivated parties. In other words, you can't know what your home is worth until after you sell it.

But if that is the case, then why are we so preoccupied with guessing, and how do the appraisers come up with their prices for fair market value?

Let's take these one at a time. First, for most of us, our own home is probably our largest single investment. It has served us well for many years not only as a residence, but as a forced savings account. In addition, depending on how long we have owned and whether or not we have refinanced, it may also be our largest single asset, with an equity we have watched grow steadily year after year.

Because equity is the difference between what is owed on your house and what it is worth, it becomes necessary for us to know those two numbers. A call to the bank will reveal your loan balance, but what the house is worth is a mystery. As to that question, we must enter the clandestine world of real estate appraising.

Real estate appraising is both an art and a science. The science part measures homes objectively, seeking to quantify value of the property. The scientific goal is to find a minimum of three comparable homes that have sold nearby recently and, using that data, apply values to the subject property and arrive at a justifiable estimate of value.

Appraisers are quick to point out that they have a very structured approach to measurement, defining what is and is not a comparable sale, and even what is and is not a square foot of living space. For example, if any portion of a living level is even slightly under ground level, then that entire level is not considered as "gross living area." Instead, the appraiser must classify that entire level of the home as "basement," regardless of its finish or number of doors or windows.This objectivity goes to the detail of subtracting or adding value for things as minor as the view, the site, the design of the home, and even the degree of energy efficiency of the home.

As far as it goes, the process used by appraisers today does a fairly good job of forcing a reasonable prediction of what a home might sell for if it sold today. Even so, the number the appraiser puts down on the form is only an estimate — a best guess — as to what a typically motivated seller would be willing to accept and what a typically motivated buyer would be willing to pay. Yes, that's the definition of fair market value. But I don't believe that "typically motivated" condition exists in many real estate transactions in the metro Atlanta area today.

Instead, I believe that many of those who might otherwise be in the market to buy a home have decided to "sit on the fence" for a few more months, waiting to see what happens with the economy. Why buy now if prices are going to fall dramatically soon?

Is it possible that we are today seeing a concentration in the pool of buyers, skewing it toward those who are not typically motivated, but instead are looking for great buys from desperate sellers who must sell at any price? If that is the case, it would explain a lot.

With current levels of foreclosures, there are many sellers who are highly motivated to sell their homes, if for no other reason than to stop the foreclosure.

I also believe that many current owners, recognizing there is almost a one-year supply of new homes waiting for buyers, have decided to wait for better times to sell.

My point is this: Until we see a healthy level of sales re-established in the metro home market, we may see an unusual level of volatility in reported home values. That makes the appraiser's job particularly difficult, and brings into sharp focus the challenges facing the real estate market today.