What is the overall purpose of conducting a property appraisal?

The overall purpose of conducting a property appraisal is primarily to determine the fair market value of a property. This is a crucial factor in various real estate transactions, as it provides an objective assessment of what a property is worth based on comparable sales, current market conditions, and the property's specific features. Knowing the fair market value aids buyers, sellers, and financial institutions in making informed decisions regarding purchasing, selling, or financing the property.

While establishing rental rates, assessing property taxes, and predicting future property values may be related activities, they are not the primary objective of an appraisal. Rental rates often rely on current market analyses that may go beyond the scope of an appraisal. Similarly, property tax assessments use different methodologies that may not align directly with market value determinations. Predicting future property values involves speculative factors and market trends rather than the factual analysis and valuation that appraisers conduct when determining the present fair market value. Thus, the focus on establishing fair market value encapsulates the essential reason behind conducting an appraisal.