What is the primary purpose of property valuation in real estate?

The primary purpose of property valuation in real estate is to determine the market value of a property for various transactional needs, such as purchasing, selling, or financing. Accurate property valuation is essential for buyers and sellers to agree on a fair price during a transaction. For lenders, understanding the market value of a property helps them assess risk and determine loan amounts. Various valuation methods, such as the sales comparison approach, income approach, and cost approach, are used to arrive at an accurate estimate of a property's value, reflecting current market conditions.

While other aspects, such as estimating taxes or assessing insurance needs, are important, they do not capture the central role of market valuation in facilitating real estate transactions. Valuation forms the foundation for these other actions but is most directly tied to enabling informed decisions in purchasing and selling properties or securing financing.