What is an appraisal in the context of real estate?

An appraisal in real estate refers specifically to an assessment of a property's market value, which is determined through a systematic evaluation of the property’s features, location, and recent sales data for comparable properties. This process is usually carried out by a licensed appraiser who uses standardized methods to ensure an objective and fair market value is assigned.

The purpose of an appraisal is crucial in various transactions involving real estate, particularly for securing financing or determining the selling price. Lenders require appraisals to ensure the property is worth the amount of money being borrowed. An accurate appraisal aligns with market conditions and provides both buyers and sellers with a realistic perspective of a property’s worth.

In contrast, other options do not accurately reflect the nature of an appraisal. For instance, a contract between a buyer and seller pertains to the legal agreement outlining the terms of sale, while a list of potential buyers does not assess property value at all. Additionally, a detailed inspection of the property's condition focuses on its physical state rather than its monetary valuation, which is the central focus of an appraisal.