A judgment or estimate of a property's current market value prepared by an appraiser, most commonly for loan or taxation purposes.

Appraising property is necessary before a bank or other lender will approve a mortgage for a home buyer. Appraisers will look at many factors when examining a property’s value. These include:

• Size of the property and the land
• Age of the property
• General condition of the property
• The surrounding area and neighborhood
• Market value of similar homes in the same area

Example of an Appraisal

Bankapedia's Take

Whether or not a loan is approved relies so heavily on what value the appraisal produces. For this very reason, the appraisal industry is another hotbed of fraud. Ultimately costing banks millions a yr in lending on false value.  States and compliance boards have cracked down very hard on appraisers and have made inflating value on homes far tougher than pre 2005. A common practice nowadays is for the bank to require an in-house appraisal on any high value property, unique property, or in the case of some very conservative banks all properties. Thousands of appraisal shops opened up overnight during the boom, and they have be dealt the same fate as loan agents and Realtor's in the decline, in many cases shutting their doors.