In real estate, what is the purpose of an appraisal?

In real estate, the primary purpose of an appraisal is to determine the property's market value. This process involves a thorough assessment conducted by a licensed appraiser, who evaluates multiple factors such as the property’s location, size, condition, and comparable sales in the area. The resulting appraised value plays a crucial role in various real estate transactions, including buying, selling, and financing properties, as it provides a professional estimation that can protect both the buyer and the lender from overpaying for a property.

While assessing the condition of the property is important and may be part of the appraisal process, it is primarily a tool to ascertain value rather than to evaluate condition alone. Similarly, an appraisal does not guarantee the sale of a property, since many factors can affect whether a property ultimately sells, including market conditions and buyer interest. Additionally, providing legal documentation of ownership is not within the scope of an appraisal; this function is typically fulfilled through the title deed and relevant legal processes. Thus, the essence of an appraisal lies in establishing a market value that can guide various stakeholders in their real estate decisions.