An appraisal is an opinion of the most probable selling price of a home. For lending purposes, it is used to secure a loan. An appraisal helps to determine the amount a homebuyer can borrow.
The appraisal is a process used to protect the buyer, seller and lender. It is usually paid for by the buyer, but this can be negotiable.
By definition, appraisal is the market analysis of a real estate property. An appraisal measures the dollar value of a property, based upon the size, quality and location of the property, as well as supply and demand.
The analysis covers the property in question, and compares it to recent comparable sales based upon size, proximity and condition. An appraiser is and must always be an unbiased disinterested third party.
While an appraisal is extensive, it does not cover a complete analysis of construction, structural stability or compliance with building requirements. This is outside of the scope of work of a typical appraisal. These aspects are covered during a home inspection. It is always recommended to order both an appraisal and home inspection before purchasing a home.