The Difference Between Real Estate Assessment and An Appraisal

The Difference Between Real Estate Assessment and An Appraisal

The value of any real estate property keeps fluctuating every day. Some days the value may be going up and on other days the value may be coming down. Those involved in a real estate transaction of buying or selling a property have to depend upon the evaluated value of the property to ascertain the exact amount of money that needs to be offered or demanded for that property. This value of the property is determined by the assessment and the appraisal methods, though both these methods of evaluation of the value of the property are entirely different from each other in terms of the objective and in their procedure.

Assessment is a process that the municipal government uses to determine the average value of the property. It is used for imposing the property tax by fair means. Although no license is required to the assessment purpose, most assessors are licensed appraisers. The assessors gather their research findings and other information about the property from the public records on that property. One of the hurdles that the assessors face is that the records and the information available in the taxable assessed value of the property are outdated and in a few cases they are entirely wrong. For this reason for tax purpose the property assessment is usually done for a specific period of time. In most cases 10 years is the average time between assessments.

If certain developments and improvements are made to the property, the assessor may visit the property on the basis of the review of the building permit that is issued for such developments and improvements. The property tax is dependent upon the value of the property. The higher the value of a property, higher will be the assessed value which will result in a higher tax. But because of the mistakes in the assessment process, properties are either overpriced or underpriced. This unfortunately results in tax iniquities which are complex and expensive to resolve.

The appraisal on the other hand, is a meticulous examination of the property, which is carried out only by a licensed appraiser. These professional appraisers make sketches, take photographs and make a detailed report about the good points and also the bad points of the property. There is no specific time period for an appraisal to take place. It may be undertaken by either buyer or seller of the property or both, in some cases.

Appraisals are given preference over assessments. Because of their more broad based and timely nature, appraisal results are used by the lenders to write the amount and terms and conditions for a mortgage loan. Property sellers very often ask for the appraisal value. This enables them to get an idea of the amount of money that would be logical to ask for a particular property. The appraisal value, undoubtedly, is the most accurate and current value of the property for buyers as well as sellers.


DISCLAIMER: Neither Indiana USDA Mortgages ( nor Luminate Home Loans is affiliated with any government agencies, including the USDA.