A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby. A loan underwriter will then compare this appraisal price to the agreed-upon purchase price to ensure that the value of the home is equal to or greater than the purchase price. Loan financing may fail if the home appraises at a price less than what the buyer and seller agreed upon. If this happens, the buyer may want to re-negotiate with the sellers to determine a lower purchase price. The lender will only lesser of the appraised value or the purchase price!
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.
An Appraisal is Different than an Assessment:
An appraisal is different than an assessment. Assessments are conducted by a government employee who evaluates the value of the home to determine how much property tax the homeowner will pay.