What is the difference between the “Assessed” Value of a home and the “Appraised” Value? This can be very confusing for homesellers and homebuyers when considering the value of a home.
Assessed Values
The Assessed Home Value is a figure used by your local government to determine property taxes. A county assessor evaluates the property’s for tax purposes. It’s very important to understand that the assessment doesn’t always align with the market value of the property. Instead, it’s commonly determined by a specific formula set by the local government. Chances are the county assessor doesn’t know what your property even looks like. The assessed value is used for property tax calculations. Counties use this value to determine the property tax rate, and homeowners are taxed accordingly. As a result, fluctuations in property taxes may not always mirror changes in market values due to factors like assessment caps or limitations on tax increases. ***** I have an amazing lender friend who will fight these values for you when you receive your annual tax assessment if you ever consider challenging your local assessor.
Appraised Home Value:
The Appraised Home Value is an evaluation estimated by a professional appraiser. This report aims to determine the property’s fair market value based on various factors such as the property’s condition, location, comparable sales in the area, and current market trends. Appraisers are typically hired by lenders during the mortgage approval process to ensure the property’s value aligns with the loan amount. The appraised value plays a pivotal role in the mortgage lending process, influencing the loan-to-value ratio and determining whether the lender will approve the loan.
Why Understanding Both Matters
Knowing the assessed value helps in estimating property taxes and budgeting accordingly. Meanwhile, the appraised value assists in determining the property’s true market worth. When buying or selling a property, knowing the appraised value helps in negotiating a fair price, while the assessed value gives insight into potential future tax liabilities. You shouldn’t confuse the two when negotiating in a real estate transaction because it can end up costing you in the end. At the end of the day it’s very important to consult with a real estate agent who will refer you to the best appraiser and who knows the difference between these two values.
