What is the primary function of an appraisal in real estate?

The primary function of an appraisal in real estate is to determine the fair market value of a property. This value is crucial for various stakeholders in real estate transactions, including buyers, sellers, lenders, and investors. An appraisal provides an objective assessment of a property's worth based on multiple factors, such as comparable sales, property condition, and market trends.

Determining fair market value is essential for establishing an appropriate listing price, negotiating offers, and securing financing, as lenders typically require an appraisal to ensure that the loan amount is justified by the property's value. This consideration helps protect both the lender and the borrower in real estate transactions.

While estimating future rental income, assessing neighborhood changes, and evaluating aesthetic appeal are important aspects of real estate analysis, they do not serve as the primary purpose of an appraisal. All these factors can influence property value, but the core objective of an appraisal remains the accurate determination of fair market value, ensuring transparency and fairness in real estate dealings.