When talking about real estate, the words “appraisal” and “assessment” are often used interchangeably. Both Appraisal and Assessment have to do with how much a property is worth, but they do not mean the same thing. In this article, we’ll talk about how an appraisal is different from an assessment and why that’s important.
Appraisal: What is it?
A licensed appraiser usually does an appraisal to figure out how much a piece of property is worth. The appraiser will look at a number of things, such as where the property is, how big it is, what kind of shape it is in, and what similar properties have sold for in the area. The goal of an appraisal is to find out how much the property is worth on the open market.
Assessment: What is it?
A tax assessment, on the other hand, is a way to figure out how much a property is worth. A local government agency performs the majority of property assessments, which are based on the property’s value as of a particular date. The assessment is used to figure out how much the owner will have to pay in property tax.
Key Differences between an Appraisal and an Assessment
Both appraisals and assessments are used to figure out how much a property is worth, but they are not the same. Here are some of the differences:
The goal of an appraisal is to figure out how much a property is worth on the open market. The goal of an assessment is to figure out how much a property is worth for tax purposes.
You can do an evaluation at any time, but most assessments are done on a set schedule (e.g., annually).
Licensed appraisers are usually in charge of appraisals, while local government agencies are in charge of assessments.
An appraisal looks at a number of things, such as comparable sales, while an assessment usually looks at the property’s physical features (e.g., size, and the number of rooms).
Both appraisals and assessments are used to figure out how much something is worth, but they are not the same thing. An appraisal is an estimate of a property’s fair market value, which is usually done by a licensed appraiser. An assessment, on the other hand, is a local government agency’s estimate of the property’s value for tax purposes. Property owners can make better decisions about their property if they know the difference between the two.
graph TD A[Appraisal] -->|Determines fair market value|B(Property Value) C[Assessment] -->|Determines tax value|D(Property Value)