Appraisals versus Assessments

TRUE OR FALSE? Property Appraisals and Assessments are the same.

FALSE!

There can be a significant differences between the two.

Assessed Value:

Assessed value is a value placed on a home by your local jurisdiction’s tax assessor. It strictly for tax purposes and is used determine tax payments. An entire jurisdiction is usually assessed yearly with values determined by a qualified team who'll ideally survey numerous properties in different neighborhoods and look at recent sales. Ideally this assessed value should reflect the going market value of the properties in your town, and neighborhood, but since these calculations are not based upon specific details a visit to your home might reveal, they are generally less accurate than an appraisal.

While tax assessors are required to determine the value a property is to be taxed on each year, they're not required to adjust the assessed value of those properties to reflect market value. Also, different places may have differing parameters for determining assessed values, so it's very possible that the assessed value will not reflect the true market value of a home.

Appraised Value:

A qualified appraiser comes to your home, takes measurements and notes the specific features and attributes of you home. The appraiser will complete a report this visit to your home and how your home relates to comparable homes in the area to determine it's market value. An appraisal is an accurate way to determine the market value of your home.

Generally an appraiser will use a combination of approaches to accurately determine a fair and current value of your home. The Market Approach, is one method whereby an appraiser will compare recently sold, similar properties and make adjustments between the subject properties and it's comparables. The Cost Approach is a method where the appraiser will determine the cost to re-build the property in question. Lastly, the Income Approach is a method that relates to income-producing properties such as apartments. It is based on the theory that a home's value includes the present worth of the income stream that the property is capable of producing when developed to it's highest and best use.

So, before you assume that your home's assessed value is a fair representation of it's current market value, consider hiring an appraiser to get a more accurate view of the current worth of your home. If you are buying a home, your Realtor should do a Comparative Market Analysis to see if the asking price is close to market value.

An important thing to remember is that both assessments and appraisals are merely snapshots in time giving you an idea of the value of the home at the time the assessment or appraisal was done. Based upon the economy, the market and other factors, they are subject to change in either direction--up or down!