Over the past few months clients have asked, “What is the difference between an assessment, an appraisal, and the market value of my house?”
Here are some brief definitions:
Market Value: This is the price that a buyer will pay for your property when you put it on the market for sale. Market value can fluctuate. The list price for your house is a combination of evaluating recent sales of similar properties and a professional assessment from an experienced real estate agent.
Tax Assessment: This is a value for your property that is calculated by an appraiser for the municipality where you live for tax purposes. Your house is compared to similar houses and recorded on an assessor’s card or a lister’s card that can be found at your municipal office building. Assessments do not happen yearly, and they may or may not reflect the market value of your property. In most cases the appraised value is different from the market value or mortgage appraisal.
Mortgage Appraisal: If you are applying for a mortgage to purchase a property you may receive an appraisal report prepared by an appraiser. This report relies on recent area sales to validate the purchase price. Lenders will lend based on the appraised value of the property, not the purchase price. Ideally the property will appraise at or above purchase price for your loan.
We hope this clears up any confusion, but if you still have questions feel free to reach out!