A lender will not fund a mortgage until an independent expert confirms the property is worth the purchase price. That expert opinion is an appraisal. The appraiser inspects the property, reviews comparable sales, and produces a written report stating market value.

Three approaches commonly appear: sales comparison, cost, and income. Residential appraisals lean heavily on recent sales of similar homes. Commercial work often emphasizes income potential. The appraiser notes condition, upgrades, location, and any factors that could affect value.

If the appraisal comes in low, the buyer may renegotiate, bring extra cash, or walk away. Appraisers follow uniform standards and must remain independent of the transaction parties. A solid appraisal protects both lender and borrower from overpaying.

• Independent estimate of market value
• Required by most mortgage lenders
• Uses comparable sales and other methods
• Can affect negotiation or loan approval