Glossary of Terms
Appraised value is a licensed appraiser's professional opinion of a property's market value at a specific point in time, based on physical inspection, comparable sales analysis and recognized valuation approaches. It represents what the property would likely sell for under normal market conditions between an informed buyer and seller.
In lending, appraised value serves as the foundation for determining loan amounts, loan-to-value ratios and whether a transaction meets lender and investor guidelines. When appraised value falls short of the agreed purchase price, it can stall or restructure a transaction — requiring renegotiation, additional down payment or a formal dispute through the reconsideration of value process.
For home equity and refinance transactions, appraised value directly influences available equity and borrowing limits. Appraisers, loan originators and valuation companies should recognize that appraised value reflects conditions at the effective date of the appraisal and may shift as market conditions evolve.