Assessed Value vs. Appraised Value for Massachusetts Homes
What's The Difference Between Assessed Value and Appraised Value For Massachusetts Properties?
It is easy to confuse valuation terminology when you are not part of the real estate industry. Sometimes they get interchanged with one another, which causes even more confusion.
Two such terms are assessed value and appraised value. While on the surface, they may seem similar; they're very different. Market value is also different from the assessed value of a property.
Understanding assessed value is essential as a homeowner.
Each valuation method measures a property's value, but they take incredibly different approaches to calculate this figure.
Knowing the difference between an appraisal and a property tax assessment can help you understand your home's worth and how it may be taxed.
We will take a look at assessed value vs. appraised value so you better understand the differences. Let's dive in!
What is Assessed Value?
When tax season rolls around, you will undoubtedly be receiving tax notices in the mail.
An assessment notice tells you the assessed value of your home. The assessed value is the amount the government has determined your home is worth.
Local cities and towns will determine assessed value based on the money they need to run the municipality.
For example, tax collected will be used to improve school systems, public roads, parks, lakes, and other amenities that residents share.
Cities and towns will set the local tax rate and property assessments to collect what they need for communities to run smoothly.
Property data will be reviewed to determine equitable amounts for each citizen.
Property assessors consider several factors, such as home inspection findings, prior years' property data, and comparative market analysis, to determine a property's assessed value.
Understanding that tax assessments provided by assessors are primarily for taxation purposes is crucial.
The assessed value determined by the local assessor will likely not be similar to the property's actual market value if it was listed for sale.
How to Find The Assessed Value of a Property in Massachusetts
If you own a home, finding your assessed value will be easy enough, as it will be on the tax bill sent to your property,
What if you want to know the assessed value of your neighbor's home or getsother property? There are a couple of ways to determine other houses' assessed value.
The easiest ways are to visit the local town hall or ask a real estate agent for this information.
If you visit the assessor's office or tax department, they can provide you with the assessed value for any property.
A real estate agent can also give you this information as it is provided to agents through multiple listing services.
What is The Appraised Value of a Home?
A licensed appraiser determines the appraised value of any property. Typically, appraisals are conducted whenever a potential home buyer gets a loan with a mortgage lender.
Lenders want to protect their interests when loaning money. They must establish the value to ensure their lending money on a property with an appropriate value.
Appraisers will visit a home to understand numerous factors, including the square footage, bedroom and bath count, amenities, age, condition, and lot characteristics.
Once this information is gathered, they will compare it to other similar properties. Adjustments will be made up and down vs. these homes to arrive at the market value ultimately.
An appraisal contingency in a real estate contract often ensures a buyer pays fair market value. Earnest money will be returned to a buyer when buyers and sellers cannot determine the discrepancy in value.
Appraisers are also often used to calculate home values when an owner wishes to refinance their existing loan.
A traditional appraisal takes around a week for an appraiser to complete.
Appraised Value vs. Assessed Value Usually Have Little Correlation
The appraised value of a property closely resembles the fair market value or what you would expect a buyer to pay in the open market. On the other hand, the assessed value is used to collect an appropriate amount of taxes.
It is safe to say there is very little correlation between a home's assessed and appraised value.
Final Thoughts
Whether buying or selling a home, it is always essential to understand the different jargon used. Assessed value, appraised value, and market value can all be different from one another.
It is vital not to confuse them with one another. Doing so can lead to mistakes and poor decisions regarding real estate transactions.
Did you enjoy this advice on assessed value vs. appraised value? See other real estate articles written by Bill Gassett on News Break for more timely tips and advice. Bill often writes about general real estate, mortgages, finance, moving, and home improvement.
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