What is the purpose of a home appraisal?

The primary purpose of a home appraisal is to determine a property’s market value for lending purposes. This value is crucial for lenders as it helps them assess the amount of risk associated with the mortgage loan they are considering. The appraisal takes into account various factors including the property's condition, location, and comparable sales in the area to provide an unbiased opinion of what the property is worth in the current real estate market.

Understanding the market value is essential for lenders because it ensures they are not lending more money than the property is worth, which could lead to significant losses in the event of default. It also helps protect the buyer by ensuring that they are paying a fair price. Therefore, the appraisal serves as a critical tool in real estate transactions and financing.

Other options, such as negotiating repair costs, assessing tax obligations, or verifying property ownership history, are important aspects of the real estate process but do not represent the primary objective of an appraisal, which is focused specifically on determining the market value of the property.