Lancaster PA Luxury Real Estate - Assessments/Appraisals - What's the Difference?

Reblogger Everard Korthals
Services for Real Estate Pros with ---Preferred Lifestyle Advisors---
Original content by Vicky Chrisner

There is a difference between "appraisals" and "assessments" although the words are commonly used interchangeably. A educated consumer knows the differences:

Assessments

  • Completed using an automated valuation program.
  • Generally done once per year.
  • Used to determine real estate taxes.
  • Should be within a margin of error of +/- 10%.

Appraisals

  • Done by licensed appraiser who looks at the home, and comps.
  • Values property "real time" (as of the date of the report).
  • Used to support sales prices or loan amounts.
  • Should be as close to Fair Market Value as possible.

Fair Market Value is what a willing buyer will pay for a property of a willing seller in an arms length transaction. Fair Market Value is determined SOLELY by the buyer and seller, and will be reflective of the market conditions. If a seller is stuck on obtaining an unrealistic price for their property, it will not sell. If a buyer is stuck on purchasing below reasonable values for the market conditions, then he will not buy. When these two parties meet in the middle they will find Fair Market Value, and each will accomplish his goals.

Appraisals are often part of the sales process, but usually after a price has been agreed to between buyer and seller... appraisals attempt to support the price of the purchase so that financing can be obtained. Assessments are not part of the equation, except when the purchaser attempts to estimate his costs to own the home, and he is determining the taxes due for the property.

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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Great contrasting points between the two. Should be required reading for anyone needing to understand valuation methods better.

Jan 01, 2009 02:13 AM #1
Rainmaker
1,089,325
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Very good description of the differences in assessed and appraised values. Just wrote a post about this subject assessed value rarely equals the fair market value.

Jan 01, 2009 02:46 AM #2
Rainer
3,432
Georgia Endiott
PREA Signature Realty - www.preasignature.com - Saint Louis, MO
Sold on City Living - Working and Living in Saint Louis

Excellent point.  I recommend that the purchasers go to the local Assessor's website to look at the property that they are intending to purchase, so that they can see exactly what the previous years assessments have been. 

Jan 03, 2009 08:27 AM #3
Rainer
19,173
Blaine Ritchie
Select Properties Realty Rita Sjostedt Broker Pam Casto Broker OH - Parkersburg, WV
More than a sign in the yard

At a time when the values are changing rapidly, good point

Feb 11, 2009 03:16 AM #4
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Everard Korthals

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