What Is The Meaning Of Appraisal In Real Estate?

In real estate, an appraisal is a professional, impartial estimate of a property's market value, conducted by a licensed or certified appraiser. The primary purpose is to determine the fair market value—the price a willing buyer and a willing seller would agree upon, both having reasonable knowledge of the relevant facts and neither being under pressure to buy or sell. Appraisals are essential in various real estate transactions, including sales, purchases, refinancing, and mortgage lending. Lenders commonly require appraisals before approving a loan to ensure that the property is worth the amount being borrowed, thus protecting their financial interests. Appraisers consider factors such as the property’s size, condition, location, features, and recent sales of comparable properties in the area to arrive at their valuation. The process typically involves an on-site inspection, research into the local market, and the preparation of a detailed report. The results are used by buyers, sellers, lenders, and sometimes for tax, legal, or insurance purposes. Importantly, an appraisal is not the same as a home inspection; while an appraisal assesses value, an inspection evaluates the property’s physical condition.

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