What is one common purpose of a real estate appraisal?

In real estate, one common purpose of an appraisal is to establish a fair market value for a property, particularly in the context of estate planning or inheritance matters. When a property is part of an estate, an accurate appraisal is crucial for determining its value for tax purposes, equitable distribution among heirs, or potential sale considerations. This ensures that the estate's assets are accurately represented and can also help resolve any disputes that may arise among beneficiaries regarding the property's worth.

While renovation costs, rental income, and property tax rates are important financial considerations in real estate, they do not typically fall under the primary functions of an appraisal. Each of those aspects serves different purposes and may require distinct evaluations or analyses separate from an appraisal's goal of establishing property value.