What is the primary purpose of a real estate appraisal?

The primary purpose of a real estate appraisal is to assess the market value of a property. Appraisers utilize various methods and factors, including recent comparable sales, property condition, and location, to estimate a fair market value that reflects what the property would likely sell for in the open market. This valuation is crucial for various stakeholders in the real estate transaction process, including buyers, sellers, and lenders, as it informs decisions regarding pricing, financing, and investment.

Understanding the market value of a property helps ensure that transactions are fair and equitable, providing confidence to all parties involved. For example, lenders rely on appraisals to determine how much financing they are willing to provide based on the property's assessed value. Similarly, homeowners and buyers can use appraisals to substantiate their pricing strategies or financial planning.

Other options, such as providing a detailed description of the property or determining property taxes, do not capture the core function of an appraisal, which is fundamentally about valuing the property. Setting the commission for the realtor is unrelated to the appraisal process, as commissions are typically negotiated separately from the property's value assessment.