What is the primary function of a real estate appraisal?

The primary function of a real estate appraisal is to provide an estimate of a property's market value. This process involves evaluating various factors, such as the property's condition, location, comparable sales in the area, and current market trends to arrive at a valuation that reflects what a buyer might reasonably pay for the property under typical market conditions. Appraisals are crucial in various contexts, including financing, real estate transactions, and property assessments, as they establish a basis for lending decisions and ensure that properties are being bought and sold at fair prices based on a well-researched estimate of value.

The other options, while related to real estate transactions, serve different purposes. Evaluating potential buyers focuses on the buyer's financial capability and readiness but does not directly relate to determining the property's value. Calculating the tax value of a property pertains to local taxation practices, which may not correspond to market conditions or actual selling prices. Estimating renovation costs involves assessing the potential expenses needed to improve a property, rather than defining its market value. Thus, the emphasis on market value in appraisals sets it apart as the primary function in the realm of real estate.