What does a "real estate appraisal" evaluate?

A real estate appraisal is a professional assessment that determines the market value of a property by considering multiple factors. This process involves analyzing data such as recent sales of comparable properties, the property's condition, location, and unique features that may influence value. Appraisers use established methods, including the cost approach, sales comparison approach, and income approach, to arrive at an equitable market value.

This evaluation is crucial for various real estate transactions, such as purchases, refinances, and property tax assessments, because it ensures that the price negotiated reflects a fair market value. The focus is on a comprehensive assessment of what the property is worth in the current market context rather than merely looking at physical conditions, potential rental income, or historical appreciation rates. Understanding this broader scope emphasizes the role of appraisals in informing buyers, sellers, and lenders about the true value of the asset in question.