In real estate, what is an appraisal?

An appraisal is fundamentally an estimate of a property's market value conducted by a qualified, licensed professional known as an appraiser. This process involves a thorough analysis of various factors, including the property's location, size, condition, improvements, and comparable sales in the area. The end product is a formal appraisal report that reflects an objective valuation of the property, which is crucial for a range of transactions including buying, selling, refinancing, and taxation.

Understanding this concept is pivotal, as a correct appraisal provides both buyers and sellers with an informed basis for their decisions, potentially influencing the terms of a sale or the amount of a mortgage loan. This distinguishes it from other options, as a market trends report might provide insights into buying conditions but does not assess a specific property's value. A contract between buyer and seller is an agreement detailing the terms of a sale, while guidelines for property management outline procedures for managing rental properties, neither of which directly addresses the valuation aspect that an appraisal does.