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

The primary function of an appraisal in real estate is to establish the current market value of a property. An appraisal is a professional assessment conducted by a licensed appraiser who evaluates a property based on various factors such as location, condition, and comparable sales in the market. This process helps buyers, sellers, and lenders understand the fair market value, which is crucial for transactions involving buying, selling, or refinancing a property.

In real estate transactions, the appraisal plays a vital role in ensuring that the property's selling price aligns with its actual value, thereby protecting the interests of all parties involved. For example, lenders require appraisals to ensure that the property value is sufficient to secure the loan amount offered to a buyer. A precise market value gives all parties confidence in the transaction.