What is the primary purpose of an appraisal?

The primary purpose of an appraisal is to provide an opinion of value that reflects the property's worth in the context of the current market. This valuation is essential for lenders, as it helps them determine how much they can lend on a property based on its market value. The market approach utilized in appraisals considers recent sales of comparable properties to ensure the estimate aligns with what buyers are currently willing to pay.

The other options do not accurately capture the essence of an appraisal's purpose. Setting a loan limit typically involves various factors beyond just the appraisal, such as the buyer's creditworthiness and guidelines from the lender. Estimating renovation costs is a different process entirely, focused on the potential changes to the property rather than its current market value. Verifying the buyer's income pertains to the qualification process for a mortgage, rather than the valuation of the property itself. Thus, focusing on the opinion of value through the market approach encapsulates the primary function of an appraisal effectively.