Assessments, appraisals…what’s next?? When buying or selling a home, the terms just keep coming! It’s no wonder home appraisals and assessments are easily confused, especially since they both have to do with the value of a home. Well no worries! Here are the facts to help you keep them straight!
Home assessments are often called tax assessments. This determination of value is made by the local city or county government. They place their assessed value on your home in order to be able to bill you properly for property taxes. Your property is assessed annually, though a representative may not actually visit your residence each year. Typically, the tax assessors review property data from previous years and may only visit your home if you have put on an addition. Generally, no one needs to enter your home to determine the assessed value.
A home appraisal is a more involved, get-into-the-details-of-the-property kind of assessment. Appraisals are performed by state-licensed appraisers and are typically conducted at the request of a mortgage lender at the time of the sale of a home. Appraisers always visit the property and examine the home inside and out. They check building materials, upgrades, square footage and more and compare the details to recent sales of comparable homes in the area. Based upon the information gathered, appraisers provide their estimates on the current fair market values of properties.
Will They Be the Same?
The assessed value and the appraised value are often different. Assessments can run nearly the same over a period of a few years, whereas an appraisal is a snapshot at a specific period of time and is impacted by the ever-changing real estate market.
The Major Differences
The biggest difference between an appraisal and an assessment is the purpose for which each is used. Assessments are used by local government to assess the amount of property/real estate tax homeowners must pay. Appraisals assist mortgage lenders in assuring a fair price during the sale of a piece of real estate.
Assessments are going to happen without you having to do a thing. Your local government wants that tax money and will be sure to have your real estate assessment up to date so that you may pay it! You should receive annual statements of your real estate tax assessment.
Buyers want the appraised value to be at the sales price or lower because if it comes in low, sellers will need to make adjustments. Sellers want the appraised value to be at the sales price (NOT lower) or they may need to lower their sales price.
Appraisals will be set up during the sale of a home in coordination with your realtor and mortgage lender. They must happen within a certain period of time before a mortgage can be approved, and in order for that approval to go smoothly, you want the appraised value to be less than the purchase price.
I hope that clears things up, but if it doesn’t, I’d be happy to give you more information. And of course, if you’re interested in buying or selling a home in Northern Virginia, contact me. I’m your go-to when you need a real estate professional!