What is a primary purpose of real estate appraisal?

A primary purpose of real estate appraisal is to determine market value. This involves evaluating a property’s characteristics, location, and the current market conditions to establish a fair and accurate value reflective of what the property would sell for in an open market. This information is critical for various stakeholders, such as buyers, sellers, and financial institutions. Accurate market value assessments help ensure that transactions are executed fairly and transparently, allowing for informed decision-making.

While setting rental prices, assessing property taxes, and facilitating property sales are all related to real estate transactions, they are not the primary purpose of an appraisal. Setting rental prices can be influenced by market value but involves additional factors such as demand and rental trends. Assessing property taxes is more aligned with governmental valuation processes rather than the market-driven analysis that appraisals provide. Finally, while appraisals facilitate property sales by providing an accurate value, the core function remains focused on determining that market value.