Difference between appraisal and valuation

The main difference between an appraisal and a real estate valuation lies in their uses and the methodology applied to each:

Real Estate Appraisal:

• Purpose: It is conducted to determine the value of a property in a specific situation, such as obtaining a mortgage loan or presenting it before a judge. The appraisal is often required by financial institutions to ensure that the property can cover the loan in case of non-payment.
• Methodology: Generally, it follows a more standardized and regulated methodology. The appraisal is carried out by an accredited appraiser, who uses uniform criteria and, in some cases, regulations established by official entities.

Real Estate Valuation:

• Purpose: The valuation is used for a wide variety of objectives, such as buying/selling, insurance, tax determination, or even legal proceedings. It can be more flexible and subject to broader interpretations. It is usually much more accurate in reflecting the market value of the property.
• Methodology: Although it can also be based on similar methods as an appraisal, it may be more subjective and depend on the professional conducting it. The criteria can vary more depending on the specific purpose for which the valuation is being conducted.
• Usage: It is often used to provide a general idea of a property's market value, but it does not always require as much formality as an appraisal for its application.

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