In relation to real estate, what does the term 'appraisal' commonly involve?

The term 'appraisal' in real estate primarily involves estimating the value of a property through a comprehensive analysis of various market factors. This process typically includes examining comparable sales (known as "comps"), considering the property’s condition, location, and any unique characteristics that may influence its value. Appraisers utilize established methodologies, such as the sales comparison approach, cost approach, and income approach, to ensure that their estimates reflect current market conditions and trends.

By focusing on market analysis, appraisals provide valuable insights into how much a property is worth in the eyes of buyers and sellers, ultimately aiding in informed decision-making for transactions, financing, and investment. This detailed process is essential for establishing a fair market value that can be objectively justified to stakeholders involved in the transaction, including lenders, buyers, and sellers.