A real estate appraisal determines the value of a home, business, or other property, including the land and building. An appraisal may be carried out for a number of different purposes.

Some reasons for which an appraisal might be carried out at a home or business include mortgages, insurance, home equity loans, and sales. Banks and other lending institutions require an appraisal of a home before they will issue a mortgage loan for someone to purchase it; this ensures that it has sufficient value as collateral. An appraisal can be used to determine the price a home or business should be sold at, and can be used to assure potential buyers of its value. Because of changes to the property and/or the real estate market, appraisals expire fairly soon and are no longer considered valid.

Different people and businesses look for different amounts of value in a real estate appraisal. A bank will determine if the home is worth at least as much as the amount of the mortgage or home equity loan being applied for, an insurance company wants to find how much the home and/or its contents can be insured for, and a potential buyer wants to make sure that the home’s value meets or exceeds the price it is being offered at. Factors which can impact an appraisal value include aspects which are under the owner’s control (building condition, landscaping) and outside of it (neighborhood, real estate market, traffic, etc). Municipalities use estimated property values to determine local property taxes; however, these estimations are performed by an assessor (not an appraiser) and usually cannot be applied to the same purposes as an appraised value.

In most states, real estate appraisers have to be certified or licensed, meeting various requirements. According to the federal Bureau of Labor Statistics web site, the state requirements usually include training and examinations which have to be passed. Some appraisers work for real estate businesses, while nearly half are self-employed. Most have college degrees, but this is not a requirement for appraisal work. The BLS web site also indicates that appraisers conduct a substantial amount of research in the process of real estate valuation, in addition to personally inspecting the property.

Overall, a real estate appraisal is a determination of the value of a property conducted by a person who is very knowledgeable about the local real estate market and factors which increase or decrease the value of a home.