What does an appraisal determine in real estate?

An appraisal in real estate primarily determines the market value of a property. This valuation process involves a licensed appraiser evaluating various factors, including the property's condition, location, comparable sales in the area, and current market trends. The goal is to establish an unbiased estimate of what the property would likely sell for in the open market under normal conditions.

While selling price can be influenced by many factors, including negotiations and market demand, an appraisal focuses on the objective market value, which is based on factual data and analysis. Therefore, it's essential for financial institutions, homeowners, and potential buyers to understand the market value, as it serves as a critical component in transactions, lending decisions, and investment assessments.

Other options like rental value and the age of a property are not the main focus of an appraisal. Although these factors could be relevant in specific contexts, such as property management or resale considerations, they do not define the primary purpose of an appraisal, which is to ascertain the market value.