In real estate, what does an appraisal aim to determine?

An appraisal aims to determine the fair market value of a property, which is the price that a willing buyer and a willing seller would agree upon in an open market under usual and ordinary circumstances. This value is critical as it influences various aspects of real estate transactions, including sales, financing, and property taxation.

Appraisers use standardized methods and procedures to assess a property's condition, features, and surrounding area, allowing them to provide an objective valuation based on comparable properties, market trends, and the current economic environment. Establishing fair market value is vital for ensuring that buyers do not overpay and sellers receive a fair price based on market conditions.

In contrast, a listing price reflects an owner's expectations or strategic pricing decisions, while appreciation focuses on future value trends, and repair costs relate to maintaining or improving a property’s condition but do not directly impact its current market value. Thus, the focus of an appraisal firmly aligns with determining the fair market value.