Appraisal versus Assessment – What’s the Difference?

Home valuation is one of the tricky areas of real estate. In general, you want a high appraisal and a low assessment. But shouldn’t they be the same? Well, in a perfect world your assessment and your appraisal would be the same, but you don’t want the world to be perfect in this regard. Here’s why:

Appraisal

An appraised value comes from the report completed by a licensed professional appraiser to determine property value at a specific point, typically for a buyer to obtain a mortgage. It is a tool used by underwriters for lenders to determine if the home has enough collateral for the loan needed to purchase or refinance it.

Appraisers compare the home to similar properties in their evaluation. They look for both similarities to find a base value and difference to increase or decrease the value such as the roof’s age, livable square footage, exterior materials, upgrades, and other finished. Using these numbers and other valuation formulae such as the cost to rebuild the home (similar to your homeowner insurance values), and potential income from rental or other uses, the appraiser determines a possible value.

The market value is not the same as the appraised value, however. While it starts with the appraised value, other determiners such as the desirability of the area, or circumstances such as a tornado, hurricane, or eminent domain issues may adjust the market value above or below the appraised value.

Assessment

A home’s assessed value typically comes from the taxing authority for the municipality. It is the method of determining the tax basis (or valuation) of the property. The tax assessment is a percentage of that value that the homeowner pays annually to provide the municipality money for water and fire services, schools, capital improvements to roads, bridge, and public parks and additional essential services.

The amount of the percentage and its designations differ for every taxing authority, so a home in one neighborhood might have a different assessed value from an identical house in another block nearby if the boundary lines for the taxing authority (school district, for example) differs.Some counties and cities reassess homes only when they sell, while others have periodic assessments. And the percentage rates of the assessments change when voters approve various tax levies for a variety of purposes.

An appraisal affects your ability to obtain a mortgage for your home while an assessment relates to the ongoing yearly tax expenses. Since a third factor determines the home’s selling price, the market value, your professional realtor should guide your understanding of how these factors affect your home purchase or sale.

What Affects Your Home’s Resale Value?

Many of us will move home several times throughout our lives. Whether it’s relocating for work, needing a bigger house for children, or a quiet place to retire to, it’s likely that the home you live in now won’t be yours forever.

 As a result, many homeowners wonder what they can do to ensure their home will have a high resale value when the time comes to move on.

 The good news is that there are a lot of things you can do now that will give you a good return on investment when it comes to selling your home later. However, there are a few factors that affect a home’s valuation that are out of your control. We’ll talk about all of those factors below. So, read on for a list of the factors that affect your home’s resale value.

 The age of your home

Your house may not complain about it, but it isn’t getting any younger. Homes tend to slowly decrease in value over time. A home built in the late 1970s, even if it’s well taken care of, most likely won’t sell for the same price as a 15-year-old home.

There is one exception to the rule, however, and that is historical houses. Homes that are a century old can sell for top dollar because of the craftsmanship and history that the house contains.

Admittedly, this is a niche market, as many people just want a safe and efficient home to live in. However, there are some homebuyers who will put in a bit of extra work around the house for the chance to live inside of a piece of history.

Smart renovations

When you’re upgrading your house it’s important to remember how that upgrade will pay off years down the road. Some renovations will almost always give a good return on investment such as a finished basement or attic and improving efficiency via added insulation or replacing windows.

Renovations that match a very specific decorative taste or style could come back to haunt you. This includes bathroom sinks, kitchen cabinets, countertops, and other expensive projects that are subject to the next owner’s taste. While these upgrades can give a good return on your investment, they’re more likely to be successful if they fit the current trends of style and craftsmanship.

Neighborhood and town

One of the factors of home valuation that you have little control over is the town and neighborhood the house is located in. If there are closed down businesses, foreclosed and deteriorating homes then potential buyers might be turned off to the neighborhood.

Similarly, the town you live in has a lot to do with how much people are willing to spend. If you have easy access to interstate highways and large cities, highly rated schools, and good local infrastructure, then buyers are likely to take these into consideration when making an offer, as the average cost of a home in your town is likely higher than some surrounding towns.