So, who makes sure the value of the property is in line with the amount being paid? This is where the appraisal comes in. An appraisal is unbiased estimates of what a buyer might expect to pay or a seller receives for a parcel of real estate, where both buyer and seller are informed parties. Most people turn to a licensed, certified, professional appraiser to provide them with the most accurate estimate of the true value of their property.

The steps involved in real estate appraisal are:

The Inspection
An appraiser inspects the property to ascertain the true status. The appraiser must actually see features, such as the number of bedrooms, bathrooms, the location, and so on, to ensure they really exist and are in the condition a reasonable buyer would expect them to be.

The inspection often includes a sketch of the property, ensuring the proper square footage and conveying the layout of the property. Most importantly, the appraiser looks for any obvious features or defects that would affect the value of the house.

Once the site has been inspected, an appraiser uses two or three approaches to determining the value of real property: cost approach, sales comparison and, in the case of a rental property, income approach.

Cost Approach
The cost approach is the easiest to understand. The appraiser uses information on local building costs, labor rates and other factors to determine how much it would cost to construct a property similar to the one being appraised. This value often sets the upper limit on what a property would sell for.

Sales Comparison
The sales comparison approach to value takes into account mitigating factors, such as location and amenities. Appraisers know the neighborhoods in which they work.

They understand the value of certain features to the residents of that area. They know the community layout, traffic patterns, school zones and busy throughways. They use this information to determine which attributes of a property will make a difference in the value. Then, the appraiser researches recent sales in the vicinity and finds properties which are ''comparable'' to the property being appraised. The sales prices of these properties are used as a basis to begin the sales comparison approach.

Income Approach
For income producing properties, such as rental houses, the appraiser may use a income approach when valuing the property. In this case, the amount of income the property produces is used to arrive at the current value of those revenues over the foreseeable future.

Written Appraisal Report
Combining information from all approaches used, the appraiser is then ready to stipulate an estimated market value for the subject property. The resulting written report is known as the written appraisal report.

This appraised value is often used as a guideline for lenders. An appraiser will help you get the most accurate property value, so you can make the most informed real estate decisions.