Appraised Value vs. Tax Assessment

Appraised Value verses Assessed Value can be one of the most misunderstood concepts in property values.

An appraisal is a formal estimate of market value performed by a licensed appraiser using analytical procedures and formulas.  The appraiser will use the sales price of recently sold, nearby homes, with similar features (comparables), making adjustments for any differences between the subject property and the homes being comnpared.  Most commonly, the appraiser will use a combination of three formula’s to determine market value; 1) Market Data Approach (Direct or Comparable Sales) 2) Cost Approach (Cost appreciation/determining the cost to rebuild and/or 3) Income Approach (present worth of future income/income producing properties).

Appraisals are done most commonly when a property is to be financed or refinanced, but may also be requested for a variety of other reasons.  We suggest that homeowners perform an appraiser once every few years to establish a value baseline, especially in cases of Eminent Domain or other scenario’s which could negatively impact your home’s value.

Assessed Value is assigned to a property by local government as a basis for determining property taxes.  The City/County Assessor’s office uses basic property information provided when the home was built, plus any improvements made which required a permit, in combination with any recent sales/refinance history, to make their tax assessment.  Typically Assessor’s do not visit the inside of a home, so there assessments will most likely not include basic improvements like countertops, upgrades to light and plumbing fixtures, flooring, painting and other improvements which do not require a permit or general maintenance and cleanliness.  As such Assessed Values can vary widely and cannot accurately be used to determine a home’s Market Value.

That being said, keep in mind….

  • Assessment = Basis for determining taxes
  • Appraisal = Basis for determining Market Value

Here are a few great points by Kim Daugherty, Real Estate Checklists and Systems,

  • Appraisals provide an objective opinion of value, but it’s not an exact science so appraisals may differ.
  • For buying and selling purposes, appraisals are usually based on market value — what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes.
  • Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.
  • Appraised value doesn’t take into account special considerations, like the need to sell rapidly.
  • Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.

© Copyright the National Association of REALTORS® – Used with permission from Kim Daugherty, Real Estate Checklists and Systems,

Intro Author: Lee Gosselin, Associate Broker & Owner


Short Sale=Not A Short Process

If you are a home owner constantly searching online for homes, you are more than likely coming across listings that state “Short Sale-Subject To Third Pary Approval”. 

As the market inherits more and more of these short sales, it is almost impossible to not come across them such as much as it is impossible it is to search without coming across a Bank Owned Property, however there is a BIG difference.

A short sale simply means the list price is lower than what is owed on the current loan itself, and any offers will have to be reviewed by the bank, and their negotiators.

Now here is the details that cause many home purchasers that write an offer to lose their steam and excitement.  From the time you write an offer on one  of these short sales, it could be anywhere up to 45 days before you hear any type of response.  I know right!!  Patience is very much required in this type of home purchase.

In addition to the timeframe obstacle, most short sales are sold As-Is just like a bank owned property so be prepared to do any needed repairs yourselves.

The positive thing about this is you could very easily be getting a great home at a great deal. Another item is that because short sales are becoming part of every day life in the Real Esate world, the banks are getting their processess more streamlined.

So now that you found the perfect house, you have imagined exactly how you are going to furnish it, and now just discover it is a short sale, have patience, and make sure you are fully informed of the process, before moving forward.