Final answer:
An appraisal on property may be sought for selling farmland, for tax assessment purposes, or by banks for loans requiring property as collateral. Appraisals ensure that property values reflect current market conditions for sales and taxation, and provide security to lenders in financial transactions.
Step-by-step explanation:
There are several reasons an appraisal might be sought on property. One key reason is for the sale of farmland, often resulting from the economic pressures on small farms. As operational costs rise and profitability decreases, farmers may opt to sell their land for development into residential or commercial properties. An accurate property title and appraisal are essential for setting a sale price, which requires measuring the farm's dimensions and calculating its acreage.
Local governments also conduct property appraisals for tax purposes. The value of property can fluctuate due to various factors such as the economic health of the area, the quality of school districts, and overall desirability. These assessments are crucial for local governments, especially since property taxes can vary significantly and can be a major source of revenue. Furthermore, the existence of tax-exempt properties, such as those owned by colleges and churches, can impact the tax base of a municipality like Boston, where a substantial portion of property value is exempt from taxes.
In the realm of finance, a bank may require an appraisal of property used as collateral for a loan to verify its value. The property serves as security for the lender in case the borrower defaults, ensuring the bank can recover the loan amount by selling the collateral.