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A real estate appraisal is necessary in virtually every real estate transaction that involves any sort of outside financing bank loan or other capital and appraisal allows a lender or an investor to get an independent third-party opinion on the value of a piece of real estate. A few things to note about an appraisal. It is not the actual value of a property. But in fact, an appraisal is an opinion of value of an independent, neutral third party based on an arm's length transaction. That means two parties that are not related to each other under normal market conditions. And appraisal represents the appraiser's opinion of the most probable price or value under competitive market conditions. There are three different approaches to determining the value of a piece of real estate. There's the sales comparison approach. There's the cost approach and the income approach all three are typically used. And then a weighted average of the three is taken to come up with the appraiser's opinion of