What is the purpose of an appraisal in real estate?

The purpose of an appraisal in real estate is to assess the value of a property by a licensed appraiser. This process involves a professional evaluation that considers various factors, including the property's location, size, condition, and comparable sales in the area. An appraisal is crucial for determining a property's market value and is often required by lenders before issuing a mortgage, ensuring that the loan amount does not exceed the property's worth.

While estimating a selling price is part of the appraisal process, the appraisal itself specifically focuses on an objective assessment of value. Assessing a buyer’s creditworthiness involves examining the buyer's financial background and credit history, which is a separate evaluation essential for mortgage approval but not part of the appraisal's purpose. Additionally, determining repair costs is not within the appraisal's scope; instead, this is typically the function of a home inspection. The central role of a licensed appraiser is to provide an unbiased evaluation of the property's value, which supports buyers, sellers, and lenders throughout the transaction process.