An appraisal is a neutral third party’s estimate of the value of a specific asset. Appraisals in the home buying process are performed by professional, often licensed or certified, appraisers who take into account the neighborhood, the condition the property is in, recent sales for properties with similar features (i.e. number of bedrooms or square footage), and more. The appraisal can seem similar to the home inspection, but is different primarily in that the appraisal is for the benefit of the mortgage lender, whereas the home inspection is for the benefit of the buyer. The point of the appraisal is to ensure that the amount you’re offering to buy the home for is appropriate. The lender doesn’t want to lend you more money than the home is worth, since the value of the property is their collateral for the loan. If they lend you $250,000 and you default they don’t want to foreclose and sell the home to find it out it’s only worth $150,000. They will have lost money.