An appraisal is a formal opinion of a property's value prepared by a licensed appraiser, most often because a lender requires one before funding a loan. For residential rentals the appraiser typically leans on recent sales of comparable properties, adjusting for differences in size, condition, and location; for larger income property the income approach — value derived from net operating income — carries more weight. The lender uses the result to size the loan, since loan-to-value is calculated against the lower of price and appraised value.
An appraisal below the contract price is one of the most common ways a deal wobbles: the buyer must bring more cash, renegotiate, or walk under an appraisal contingency. It is worth remembering what an appraisal is not — it is one professional's estimate on one date, not a guarantee of resale value, and it is distinct from an inspection, which assesses condition rather than worth.
Editorial ownership
Written and maintained by the Aptoria editorial team
Editorial method reviewed July 28, 2026. Aptoria reviews scope, source fit, examples, limitations, links, and publication gates. This record does not claim attorney, CPA, lender, appraiser, or other independent professional sign-off.
Professional review is not claimed. Verify current law, tax treatment, loan terms, valuation inputs, and property-specific facts with the appropriate qualified professional before acting.
Related terms
Financing
Comparables (comps)
Recently sold or rented properties similar to yours, used to estimate what a property is worth or what rent it can command.
Investing metrics
LTV (loan-to-value ratio)
The loan amount as a percentage of a property's value — a core measure of leverage and lender risk.
Investing metrics
After-repair value (ARV)
ARV means after-repair value: the estimated market value a property may have after planned renovations are complete.
Financing
Mortgage refinance
Replacing an existing mortgage with a new loan, usually to lower the rate, change the term, or pull out built-up equity as cash.
Financing
Earnest money
A good-faith deposit a buyer puts down when a purchase contract is signed, held in escrow and credited at closing.
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