What is the purpose of an "appraisal" in real estate?

An appraisal serves the purpose of providing an unbiased assessment of a property's market value, which is crucial for a variety of real estate transactions. This valuation is typically conducted by a licensed appraiser who evaluates various factors, including the property's condition, location, and comparable properties in the area, to determine its fair market value. This objective assessment is utilized by lenders, buyers, and sellers to ensure that a property is priced accurately in the market, thus facilitating informed decision-making in transactions.

Understanding the market value is essential for securing financing, as lenders often require an appraisal to ensure that the property's worth aligns with the loan amount being requested. This helps protect both the lender and the buyer. The appraisal is based on standard methodologies and is not influenced by the personal feelings or opinions of the property owner, setting it apart from the other options listed.