When you’re purchasing a house, you’ll hear multiple valuation terms bantered about by your real estate agent and your loan officer. Not sure what property value assessment is and how it differs from the property’s market value or appraised value? Read on for this and other answers to your frequently asked questions regarding property value assessment.
Q: What Is Assessment Value?
A: The assessment value is a dollar amount that determines your property’s tax rate. It’s considered to be the most stable measure of the worth of the home. An assessed value is typically calculated every year.
Q: How, and by Whom, Is Property Assessment Value Determined?
A: An assessment is calculated by evaluating comparable homes that have recently sold in the area. The appraised value may also factor into the calculation. A property assessor, typically an employee of the city, county, or parish, is the person who determines the assessment value of a piece of real estate.
Q: How Does Property Value Assessment Differ from Appraised Value?
A: An appraised value is determined by a real estate appraiser using a variety of measurements. Appraisers look at the condition of the home, neighborhood, the size, and its amenities. The appraised value is mainly used by lenders to determine how much they will lend to the buyer as a mortgage loan. Loans must be less than the appraised value to get approved.
Q: How Does Property Value Assessment Differ from Market Value?
A: The market value and assessed value are not the same, either. Market value is the dollar amount your home would sell for if you were to put it on the market. Market value is determined by what the buyer and seller would agree is a fair price. Market values are driven by market trends and how “hot” or “cold” the real estate market is. The home’s assessed value, as mentioned above, is determined by a property assessor.
Q: Does the Assessed Value Factor into Your Home Loan?
A: The simple answer is no. Market value and assessed value factor into how much of a mortgage loan you can get approved for. The assessed value, however, has no bearing on your loan terms or your ability to qualify.
Q: Does the Assessed Value Factor into Your Taxes?
A: While the property value assessment doesn’t affect your home loan, it has everything to do with your tax bill. The higher your home’s assessed value, the higher your property taxes will be.
Q: Can You Get a Property Value Assessment Changed?
A: Sometimes you can protest your home’s assessment with the property assessor and get a second valuation. If the amount seems high, make sure the government has the correct information (number of bedrooms, bathrooms, etc.) on file for your property.
Understanding what an assessed value is, what it affects and what it doesn’t, is important for homeowners. Being able to budget for a tax bill in advance can keep you on track with your finances and avoid stress.