U.S. Mortgage Index

Property appraisal

Definition

A property appraisal is a professional opinion of a property’s value, prepared for a mortgage or related purpose. It is the valuation assignment, not the purchase price and not the resulting appraised-value figure as a separate idea.

In plain English

Lenders commonly require an appraisal so they have an independent view of what the property is worth as collateral. The resulting value can differ from the purchase price. Appraised value is the number that comes out of the assignment. This page is the appraisal itself—the valuation work—not that standalone number.

Technical definition

Consumer glossaries describe an appraisal as an opinion of value. A local-government tax appraisal is a different process.

Why it matters

Loan amount, LTV, and purchase negotiations all refer to the appraisal. Treating the contract price as the appraisal hides a possible gap.

Example

Jordan agrees to a purchase price with the seller. The lender’s appraisal opinion comes in at a different figure. The assignment is the property appraisal; the contract number is still the purchase price.

Commonly confused with

Sources reviewed

Important note

This page is the appraisal assignment. It is not a definition of appraised value as its own term.