Assessed Value
Assessed Value Vs Appraised Value
When buying or selling a property, there are many terms and concepts that can be confusing, including assessed value and appraised value. While both are used to determine the value of a property, they are not interchangeable, and it's important to understand the difference between them. In this blog post, we'll explore the differences between assessed value and appraised value and why they matter.
Assessed Value
Assessed value is the value of a property that is used to determine property taxes. The assessed value is determined by the local government or a municipal tax assessor's office. This value is usually based on factors such as the property's size, location, and age. The assessed value is used to calculate property taxes, which are paid annually by the property owner.
Appraised Value
Appraised value is the value of a property that is determined by a licensed appraiser. Appraisers evaluate a property's value by analyzing factors such as location, size, condition, and comparable sales data. Appraised value is used by lenders to determine how much to lend to a buyer, by sellers to determine a fair asking price, and by buyers to negotiate a fair purchase price.
Key Differences The main difference between assessed value and appraised value is their purpose. Assessed value is used to determine property taxes, while appraised value is used to determine the fair market value of a property. Assessed value is determined by a government agency or tax assessor, while appraised value is determined by a licensed appraiser. Additionally, assessed value is usually lower than appraised value since it does not necessarily reflect current market conditions or the actual value of the property.
Why They Matter It's important to understand the difference between assessed value and appraised value because they have different uses and implications. If you're a property owner, knowing the assessed value can help you budget for property taxes. If you're buying or selling a property, understanding the appraised value can help you negotiate a fair price. Appraised value is also used by lenders to determine how much to lend to a buyer. In some cases, the appraised value may be lower than the asking price, which can impact the buyer's ability to secure financing.
In conclusion, assessed value and appraised value are both important concepts to understand when buying or selling a property. While they both relate to a property's value, they serve different purposes and are determined by different entities. By understanding the differences between assessed value and appraised value, you can make informed decisions about property ownership and transactions.