The Difference Between Appraisal And Assessment Values

When buying or selling a home, you sure learn alot of new words.  ARM, loan limits, adjustments, mortgage interest adjustment, buyer agency….the list doesn’t end. However, there are two terms that you will always hear which you need to pay attention to:  Appraisal and Assessment.  These processes are a must to complete a home purchase and are often deciding factors for buyers and sellers.  William Tierney, an associate at William Raveis Scituate , provides and explanation, as well as a contrast between the two terms.  For more of William’s awesome advice, check out his blog.  

Appraisal and assessment values are typically mistaken for one another. As a home buyer or home seller, it is helpful to understand the difference between these two terms. The following is the difference between appraisal and assessment values.

Definition Of Asessment Values

Towns and cities charges a tax on residential homes. The calculation of the tax is derived from a percentage multiplied by an assessed value of a piece of property. Assessments are used strictly for levying taxes and does not actually reflect the real estate market condition. Every municipality calculates assessed value using different formulas. They usually include land area, interior living area, and exterior amenities such as garages. Marshfield, MA, the area where I live and work, can re-assess home values and/or increase the property tax percentage at regular intervals.

Definition Of Appraisal Values

An appraisal is a estimation of a home’s market value by a licensed professional employing specialized methodologies. Lenders obtain the services of appraisers to determine the value of a home as opposed to to the sale price. Appraisers always review at least three other houses that recently sold within the same city. Since a town or city’s real estate market can change constantly within a time frame, comparing relevant sales is vital to a valid appraisal.

The Difference Between Appraisal And Asessment Values

The actual price of a  home is ascertained by what a buyer is willing to pay, which can adjust at any time depending on related factors such as availability of options. Buyers should avoid relating assessed values with the price of real estate. Assessed values are used only for tax purposes and do not adjust as often as the real estate market does. Some towns infrequently change assessed values and regularly increase tax percentages instead. Only an appraisal can generate a true indication of the market price of a home.

One thought on “The Difference Between Appraisal And Assessment Values

  1. Maria Mantis

    In Westchester County in New York, some municipalities have done a revaluation of all the homes. These homes are considered to be at Full Market value and their assessment can adjust up or down annually. I have found that the municipalities that have undertaken reval are closer to market value as defined by an appraiser. Of course, there are still discrepancies among the two since they are both estimates and considered an art and not a science.


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