Appraisal

An appraisal is a documented, independent opinion of a property's market value as of a specific date, developed by a qualified appraiser. It considers the property's characteristics, relevant market conditions and, when appropriate, comparable sales and other valuation methods.

Mortgage lenders commonly require appraisals to evaluate whether a property's value provides adequate collateral for the requested loan. Appraisals are also used for refinances, home equity lending, estate settlement, tax appeals and divorce proceedings. Depending on the assignment, an appraiser may conduct a full interior inspection, an exterior-only review or complete a desktop appraisal. 

Appraisal independence helps ensure the value conclusion is not influenced by parties with a financial interest in the transaction. When an appraisal comes in below the contract price, the parties may renegotiate, the buyer may need to bring additional funds to closing or the transaction may proceed under other terms allowed by the contract and lender.