What does the term 'appraisal' specifically refer to in real estate?

The term 'appraisal' in real estate specifically refers to an estimate of property value. This process involves a professional appraiser assessing various factors such as the property's condition, location, and market trends to determine its fair market value. The appraisal is typically required when a property is being bought or sold, and it helps ensure that both parties have a reasonable understanding of the property's worth.

An appraisal can influence negotiations and financing, as lenders usually require an appraisal to confirm they are not lending more money than the property is worth. Understanding this concept is crucial for anyone involved in real estate transactions, as it helps inform buying decisions, pricing strategies, and investment opportunities.