You might be wondering what the assessed value of your home is, but what about the appraised value? Though you might think that these are the same, this isn’t the case.
The assessed value is more about what a community needs to collect for taxes, whereas the appraised value is an expert and more accurate valuation. Tax assessments in real estate are very different from fair market value.
We will look at the differences between the appraised and assessed home value to avoid real estate mistakes.
When buying or selling a home it is crucial to understand the differences in these valuations. Your house might not sell if you base the price on improper measures. The same can be said when you buy a home.
What is Your Home Worth?
The value of your home can be judged through a few different methods, including finding the fair market value, the assessed value and the appraisal value.
The fair market value is the amount the home should sell for if listed in current market conditions. It shows the likely amount of money you will receive when selling and gives you an idea of the price range you can look for when searching for a new home. Property taxes are based on the value as well.
What is the Assessed Value?
The assessed value provides a yearly estimation of the worth of your home. This is for the purposes of taxation and will be completed by a government tax assessor.
Maximum Real Estate Exposure has an excellent resource worth reviewing that we have included above. It's a comprehensive guide on everything to know about assessed values.
How the Tax Assessed Value Works
To determine how much you will have to pay in property taxes, your local tax authority will assess the value of your home. They use professional assessors to check the property data and possibly visit the home to find the assessed value.
There are several ways to find this valuation. The assessor will look at historical sales data, inspection reports and comparative market analysis. The appraised value might also be considered, along with any improvements that have been made recently. Through these methods, they should find a fair assessment of the value.
Assessed values for tax purposes can also vary from state to state. For example, some states will update assessments more frequently than others. The frequency of assessed values in Massachusetts could be different than in Texas or California.
An assessor can give the home a lower or higher value than an appraiser will. Assessments should never be relied upon as being your home's actual value.
Here is how to find a property's tax assessment.
What is the Appraised Value?
A professional appraiser will give their estimation of the property’s value, which should offer an accurate sales price under present market conditions.
This appraisal is their opinion of the fair market value of the home, however, another appraiser could come to a different valuation.
How the Appraisal Works
Lenders require a home appraisal to make sure the value of the home meets the amount they are loaning. The appraiser will inspect the property and check comparable home sales in the same area. With this information, they will create an appraisal report.
The features of the home, the square footage, the number of rooms and more, will be used by the appraiser to compare it to other sold homes.
The condition of the home will also factor into the comparison to comparables. The appraisal report will mention things the appraiser noticed about the home, and show the calculations used to find the value.
There are numerous things that impact home values both positively and negatively. It's essential for buyers and sellers to know these items.
A home appraisal is similar to how a real estate agent calculates market value. Real Estate agents will complete a comparative market analysis that also looks at the same factors an appraiser does.
One of the benefits of working with an exceptional Realtor is proper home pricing.
How Does an Appraisal and an Assessment Affect the Value?
The appraisal and tax assessment can make a difference to the price a home sells for. If the assessment is high, the owner will have to pay more in property taxes, something that could be a consideration for buyers.
The appraisal is important because if it is lower than the amount you have offered for a home, you might have to find the difference out of pocket. Even if the appraisal is higher than the offer, the seller could ask you to pay more.
Disputing Appraisal and Assessment Results
If the home doesn’t appraise, or if the tax assessment is high, you can dispute these findings.
Disputing a tax assessment
If you contact your local tax office, you can appeal their assessment. You will need to provide records of transactions and details of comparable home sales to prove your claim.
Disputing an appraisal
If you believe the appraisal is wrong, you can approach the appraiser with evidence of a problem. They might not listen to your claims, however.
A second appraisal can be sought, but this is a cost you will have to bear. You will have to approach your lender with this request, and they might decide the initial appraisal is good enough. Even if they approve another appraisal, there’s no guarantee that the result will go your way.
Final Thoughts
The tax-assessed value indicates the taxes that will be due, and the appraisal is a value often used when buying a home. These values will change and aren’t necessarily related to each other.
If you are buying a home, researching sold prices of recent sales or asking for a comparable market analysis from your real estate agent is vital.
Having a good understanding of house prices will help you avoid bidding more than you should on your next home.
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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.
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