Real Estate Definitions: What's The Difference Between An Appraisal And An Assessment?

Real Estate Definitions: What's The Difference Between An Appraisal And An Assessment?

Getting accustomed to real estate terminology can be an intimidating prospect for most people. After all, buying a home is a fairly complex business transaction involving large enough dollar figures to make anyone edgy, and it is not something you go through very often. When you are buying or selling a home, it is in your best interest to educate yourself about the different terms that are used in the industry on a regular basis. When getting your property valued, it is important for you to understand the difference between a real estate appraisal and a real estate assessment. Assessment A real estate assessment is typically done by a county officer to determine an approximate value of a property. This is for the purpose of determining how much annual tax will be due to the governing authority to pay for local facilities, nost notably schools. This valuation is typically determined based on the location of the property and the real estate values of the surrounding area. Each county has an assessor who has the job of calculating the value of all of the property in the county year by year. This type of valuation is not considered to be as accurate as that given by a real estate appraisal, and the value determined by the assessment is used to calculate the tax payable on the property in question. The assessment value is not acceptable for mortgage approval purposes. Many counties have the assessment guidelines available online, so that members of the public are able to do a basic level of self-assessment of their property. Though this may not be exactly the same as the real estate assessment done by the assessor, it can give you a general guide as to how much your property is worth. Appraisal A real estate appraisal must done by a licensed appraiser. An appraisal is required most of the time when a mortgage is being taken out on a home that is being purchased. It is the lender, not the local government, who has the primary stake in the accuracy of the appraisal, as it is an essential part of determining the size of the loan. Those who are preparing their home to sell also sometimes have an appraisal completed, to get a firm idea as to the best asking price. The difference between the real estate appraisal and the real estate assessment is that the licensed appraiser is hired to do a specific real estate appraisal on the property in question. This real estate appraisal is more detailed and far more accurate in terms of determining the value of the property in question. The assessment, on the other hand, may or may not reflect a market value but is instead only "for tax purposes." Depending on the jurisdiction it may be out of touch with the real market, but as long as the valuation is relatively proportionate to the valuation of other homes in the area it constitutes a fair basis for property tax.