An appraisal is a professional opinion of value of real property, prepared by a licensed appraiser, based on analysis of market data and property characteristics.

• Estimates market value
• Used primarily by lenders
• Reflects value at a specific point in time
• Is an opinion, not a guarantee or price
• Must follow uniform standards (USPAP)

• Support loan underwriting
• Protect lenders and the public
• Assist in taxation, estate planning, and litigation

• Sales Comparison (Market Data) Approach
  • Compares recent sales of similar properties
  • Most common for residential property

• Cost Approach
  • Value = land value + cost of improvements − depreciation
  • Best for new or special-purpose properties

• Income Approach
  • Based on income generated by the property
  • Uses NOI and capitalization rates
  • Common for income-producing properties

• Buyer and seller are typically motivated
• Property exposed to the open market
• Payment in cash or equivalent
• No undue pressure on either party

• Appraisal
  • Performed by licensed appraiser
  • Used by lenders

• Comparative Market Analysis (CMA)
  • Prepared by brokers or agents
  • Used to estimate listing or offer price

• Appraisals estimate value, not price
• Lenders rely on the lower of price or appraised value