What is the primary purpose of a real estate appraisal?

The primary purpose of a real estate appraisal is to provide an estimate of property value for various transactions. This valuation is essential for multiple scenarios, including sales, financing, and investment analysis, as it informs buyers, sellers, lenders, and even investors about the fair market value of a property.

Appraisals are conducted by licensed professionals who analyze various factors, such as location, condition, and comparable sales, to arrive at an unbiased opinion of value. This process helps ensure that parties involved in a transaction have a clear understanding of the property’s worth, which is crucial for negotiating terms and securing financing.

In contrast, while identifying structural issues can be an aspect of property inspection, appraisals focus primarily on value rather than physical condition. Similarly, while appraisals do inform property taxes indirectly through assessed values, the main goal is not to determine taxes themselves but to ascertain a property's market value. Lastly, while legal documents are essential in the property transfer process, the appraisal serves a different purpose in supporting those transactions by determining value.