If you are purchasing a home or refinancing your existing home an appraisal is need during the process. An appraisal is the estimated value of the property determined by viewing the home and comparing it to recently sold homes that are similar to the property in that area. In a purchase transaction this protects the borrower from purchasing the home for more than it is worth and it also protects the lender from giving the borrower more money than what the home is worth. The appraisal must be conducted by a licensed, third party appraiser, that has no relation to the buyer and the seller, that way all parties know the determined value is fair.