What is the primary purpose of an appraisal?

The primary purpose of an appraisal is to establish fair market value. An appraisal is a systematic process that involves evaluating a property's characteristics, condition, and location to determine what a knowledgeable buyer would be willing to pay in the current market environment.

This fair market value is essential for various stakeholders, including buyers, sellers, lenders, and investors, particularly during transactions such as buying, selling, or refinancing a property. Establishing this value ensures that all parties involved have a clear understanding of the property's worth, facilitating informed decision-making.

While property taxes, market conditions, and property inspections may be related to the appraisal process, they represent secondary functions or considerations rather than the core objective. For instance, property taxes are typically based on assessed values determined by tax authorities, while assessing market conditions might help frame the context within which an appraisal is conducted. Similarly, property inspections may provide the necessary data for an appraisal, but they do not define the main goal of determining fair market value.