What Is Appraised Value in Real Estate?

The appraised value is a professional estimate of a property’s worth, determined by a licensed real estate appraiser. Lenders use appraised value to ensure the property is worth the amount being financed.

How Appraised Value Works

An appraiser evaluates the property’s condition, location, features, and comparable sales (“comps”). The resulting appraisal determines the property’s fair market worth at a specific point in time.

  • Performed by a licensed real estate appraiser
  • Required for nearly all mortgage loans
  • Protects lenders from overfinancing a home
  • Based on comps, condition, size, location, and market trends

Example of Appraised Value

A buyer agrees to purchase a home for $400,000. The lender orders an appraisal, and the appraiser values the home at $390,000.

The lender will base the loan amount on the appraised value, not the contract price, which may require the buyer to renegotiate or bring additional cash.

Why Appraised Value Matters

  • Determines maximum loan amount a lender will approve
  • Affects buyer negotiations and seller pricing
  • Helps prevent overpaying for a property
  • Used in refinances to confirm current property value

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