A home purchase is the largest, single investment most people will ever make. Whether it's a primary residence, a second vacation home, or an investment, the purchase of property is a complex financial transaction that requires multiple parties to pull it all off.
Most of the people involved are very familiar. The Realtor is the most familiar face of the transaction. The mortgage company provides the financial capital necessary to fund the transaction. The title company ensures that all aspects of the transaction are completed and that a clear title passes from the seller to the buyer.
So who makes sure the value of the property is in line with the amount being paid?
There are too many people exposed in the real estate process to let such a transaction proceed without ensuring that the property's value is commensurate with the amount being paid.
That is where an appraisal comes in. An appraisal is an unbiased estimate of what a buyer might expect to pay, or a seller receives for a piece of real estate, where both buyer and seller are informed parties. To be an informed party, most people turn to a licensed, certified, professional appraiser to provide them with the most accurate estimate of the actual value of their property.