Being knowledgeable about real estate terminology is vital in understanding the buying and selling process. These terms and phrases can sound similar, yet mean very different things. A prime example of this are assessed and appraised values. Although the terms “assessed value” and “appraised value” sound very similar, they have very different meanings, and it is critical to differentiate the two.
Assessed value and appraised value are both relative measures used to determine the value of a home. The main distinction between them is the general purpose that they serve. Assessments are measures of value that indicate how the property will be taxed by a governing body. Appraisals are used to determine the home’s actual value. Many people expect there to be a direct correlation between these two values—or that the values should be the same. However, this is rarely the case.
In the case of an assessment, the process is relatively simple. The appointed assessor uses a formula of comparative market analysis, prior year’s property data, and home inspection findings in its final determinations to provide the assessed value. In most cases, the assessor does not need to even enter the home, as they can determine the value based on readily available data. If deemed necessary, they can conduct an in-person assessment.
On the other hand, an appraisal is a much more in-depth process. Property appraisals are conducted by state-licensed appraisers and are provided as a form of assurance to lenders and potential homebuyers that they are not being asked to loan or borrow more money than a given property is worth.
The appraiser takes a tour of the property and looks at the building materials used, overall condition, size, and home improvements made—among other factors—to render an estimate on the fair market value of the house. This market value becomes the home’s determined selling price in an open market, which is what someone would pay for the house if listed for sale. The appraisal can be used to prove the value of a home for other reasons, such as for property tax appeals.
The bottom line is that the home’s appraised value reflects what you might expect to get in exchange for the sale of the property if put on the market. The tax-assessed value is instead used to determine how much will need to be paid in property taxes. At Appraisals Unlimited, we can answer any outstanding questions you might have about the distinction between these two terms. We also can satisfy all of your residential and commercial real estate appraisal needs. Our large team of appraisers also offers excellent local knowledge of real estate markets and brokers in all the areas we service.
If you have an immediate need for a commercial or residential real estate appraisal, fill out the brief form below or order an appraisal online. We are the most trusted appraisal company in New England and New Jersey, performing more than 10,000 appraisals every year!
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