appraisal
A professional assessment of a property's market value conducted by a licensed appraiser, required by lenders before approving a mortgage.
Example
“The bank required an appraisal before approving the mortgage, which valued the home at $420,000 — $20,000 less than the purchase price.”
Memory Tip
APPRAISAL = a professional APPRAISING (valuing) your property. Required by lenders.
Why It Matters
An appraisal directly affects whether you can get a mortgage and how much you can borrow. If the appraisal comes in lower than the purchase price, you may need to pay the difference out of pocket or renegotiate the deal. Understanding appraisals helps you set realistic expectations and avoid overpaying for a property.
Common Misconception
Many people confuse an appraisal with a home inspection, but they serve different purposes. An appraisal estimates market value using comparable sales data, while an inspection identifies structural and mechanical problems. You need both when buying a home, as they provide different critical information.
In Practice
Suppose you offer 350000 dollars for a house and get a mortgage pre-approval for that amount. The lender orders an appraisal, which comes back at 320000 dollars based on similar properties in the area. Now you must either pay the 30000 dollar difference in cash, renegotiate with the seller, or walk away from the deal.
Etymology
From Old French 'aprisier' (to put a price on) — assigning a PRICE (value) to a property.
Common Misspellings
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Related Terms
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See Also
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