How is the value of a property generally determined for financing purposes?

The value of a property for financing purposes is primarily determined through an appraisal. An appraisal is an objective analysis conducted by a licensed appraiser who evaluates the property to establish its market value. This process involves examining various factors, such as the property's size, condition, location, comparable sales in the area, and current market trends. Lenders rely on appraisals to assess the risk associated with providing a mortgage and to ensure that the property's value is sufficient to secure the loan amount.

While a market analysis may provide insights into the property's value based on local market conditions and similar sales, it lacks the formal recognition and detailed evaluation provided by an appraisal. A property survey primarily focuses on determining the exact boundaries and physical characteristics of the property, which does not directly influence its market value. A title search is crucial for verifying ownership and any liens on the property but does not involve assessing its value; rather, it ensures that the transaction can proceed without legal issues. Therefore, the appraisal is the definitive method used for establishing a property's value in the context of financing.