What is the significance of the term “appraised value” in real estate transactions?

The term “appraised value” in real estate transactions refers to the value that has been determined by a licensed appraiser based on their professional assessment of the property. This value is derived from a comprehensive analysis of various factors, including current market conditions, the property’s characteristics, recent comparable sales in the area, and any unique factors that might affect its worth.

The significance of the appraised value lies in its authoritative nature; it serves as an impartial and objective evaluation of the property. This value is crucial during financial transactions, such as when buying or refinancing a home, as lenders often require an appraisal to ensure that the loan amount corresponds to the property’s true market value.

In contrast, values established by the property owner, marketing estimates, or buyers’ perspectives may be subjective and not necessarily reflect the market's current state. These other values do not carry the same weight as an appraised value, which is grounded in professional methodology and standards set by licensing boards within the appraisal industry. Thus, the appraised value plays a critical role in real estate transactions by providing a reliable basis for negotiation and financing.