Assessed Value vs Market Actual Value by Darin Sewell

Assessed Value vs. Market Value - Assessed value is the valuation placed on property by a public tax assessor for purposes of taxation. It is not the same as Fair Market Value. Fair Market Value is the agreed upon price between a willing and informed buyer and a willing and informed seller under usual and ordinary circumstances. It is the highest price estimated in terms of money which the property will bring if exposed for sale on the open market with reasonable time allowed to find a purchaser who is buying with full knowledge of all the uses and purposes to which the property is best adapted and for which it can be legally used. Homes Market Value - In the real world, very few individuals order appraisal reports to establish an offering price or to substantiate a purchase price. At the point that an offer to purchase (in a typical residential transaction) is made, the price has been set by other parties, not the purchaser. The price has been determined by the seller, who wishes to obtain the highest price possible, or the agent, who receives a percentage of the price as compensation and often represents the seller in the transaction. The sellers realtor's job is to do market analysis and price the property accordingly. If the sellers realtor did there job correctly then the asking price should be a correct assessment of value. There are different types of housing values available. One type of housing value is the assessed home value which is assessed usually by your county auditor. Usually your assessed home value is less than the actual market value of your home may be. This is usually a good thing because the assessed value of your home is generally the basis for your property taxes. Often, the asking price for the home is based upon comparable sales in the area - similar homes that have sold recently. Using the selling prices for those homes, they can determine what the home should sell for, and price the home accordingly. Before buying (or selling) it is wise to do some homework and look at what similar homes in your neighborhood or town have sold for recently. This information is available at county recorders offices, town offices, and from some websites. Of course, the ultimate is to have an appraisal done by a professional appraiser. This will be done anyway before any lender provides the purchase money loan. There are several online sites that can give you an estimate of your home's value. However, whether you are buying or selling, a real estate agent has access to the latest sales data and can give you a more accurate value for your home. How can I find out my homes value? - You can check with a local Realtor. They have access to comparable sales and can give you a pretty good idea what homes are worth in your area. Some online value estimators are actually lead generation sites for realtors. keep that in mind when using them. One easy way would be to call me! Although it would not be a substitute for a professional appraisal, I can access records of closed sales in your neighborhood and compare them to your home. I can also access the Multiple Listing Service and see what kind of prices similar homes as yours are currently being listed for. Short of performing a full appraisal, you will get a very good estimate of the value of your home. You can call a professional appraiser and pay for his service as often as you'd like... A real estate agent (Realtors are members of the National Association of Realtors) can give you a value. Many real estate agents have a good idea of how much a property is worth by using comparable sales. Remember that comparable sales are historical and the best are the most recent as the comparable sales get further back into history the less accurate they are Make sure that if you decide to spend the money on an appraiser that you interview the appraiser and ask about the appraiser's experience. Appraisers who work mostly on loans may not be the best appraiser for you unless you want a loan. If the appraiser does not ask you what type of appraisal you want and the form type you are probably not going to get what you want. There are many appraisal types, make sure you get what you need. Online value estimators are only as accurate as the data they have available. The more recent the data the more accurate. The more conformity you have in the type of properties the more accurate. An online value estimator in a tract situation where there is a lot of turnover will be the most accurate. Remember the online value estimator has absolutely no way of knowing if you have the original Formica or upgraded granite counter tops. I can not tell if you have upgraded your bath or your kitchen and as you get away from identical tract homes the online value estimator is reduced in accuracy exponentially. In fact they can be so bad that there is pending legislation and pending litigation that could result in their permanent demise. The best thing about online value estimators is that they are free. Although they are getting better, they do not have all the information needed to provide the most accurate value, and they won't be accepted by a lender as an appraised value. For the purposes of obtaining home equity line of credit financing, many lenders will allow your homes value to be determined using automated property valuation software or simplified ("drive by") appraisals or broker price opinions. To get a general idea of your home's value you can use an online value estimator. Online value estimators can provide you with a general idea as to the value of your home on paper. These should not be construed as an appraisal report or a true value of your home, but can usually provide a basic idea of your home's value. If you are unsure of the value and it is crucial that you need find out an accurate amount, hiring a professional appraiser is possible as well. This can be the most expensive option, but also the most accurate. There are many different online value estimators that are free, another source is a program made available through the government that generates the house value based on historical appreciation rates in your area. The only way to find out the exact market value of your home is to hire a professional appraiser to come in and do the job. How accurate are value estimators? - Most online value estimation sites will only be able to judge a value if your local tax office has updated their online database. The results given are only going to be as good as the information available. To know a more accurate value for your home, you will need to hire an appraiser. On-line value estimators are more accurate in areas where there are very similar homes, this is known in real estate as the theory of conformity. In areas where there are homes of different architectural types, size and in general are not similar, the value estimators can be off by huge amounts. So if you live in a tract with a lot of recent sales your estimator can get you quite close. I you don't live in a tract or you live in a rural area the estimators are quite useless. Online value estimators should not be used as a reliable method for determining value on a property. There is no substitution for a complete appraisal carried out by a board certified or state licensed appraiser. Many online value estimators are actually tied to a realtor that will visit you within 1 to 2 days after entering your information, as a means to be the first realtor to visit you. The down side is that they may give you an unrealistic amount that you can expect to receive from the sale of your home, as a means to get the listing. There are many different sources on-line for free estimates of the value of your home. Unless you are getting a true appraised value of your home you should not pay for the online estimates. If you would like a list of links that can help you determine the value of your home please contact me. You can usually keep a finger on the pulse of the market by reading newspaper classifieds (real estate section), and inquiring of the price when a home in your neighborhood is for sale. This will achieve far better results to determine the general value of your home, than using an online value estimator. One of the major drawbacks to online estimators is that they do not take into account specifics of your property that a realtor or appraiser would. For example take two identical houses that were built in right next to one another in 2001. House A has finished their basement added a deck and built a fence, while House B has remained unchanged since being built. In many cases the online property valuator would give both properties the same value, when in reality House A is quite possibly worth tens of thousands more. When using an online estimator, make sure they use previous "sold" prices, not current list prices. If the address of the comparable properties used are listed, go and check them out to see how they compare. Online value estimators also do not take into account any upgrades inside the home that have been made or updated. Only a true appraiser who comes out to the property can give an accurate value of the property. A Legal Appraisal by a licensed appraisal is the only true and accurate tool to evaluate the value of a home

About the Author
Darin Sewell is a Milwaukee Wisconsin based mortgage broker that specializes in first time home buyers and buyers with troubled credit. With a low stress low pressure approach to home financing Darin will make sure your mortgage experience is a positive one. Learn more about Darin at http://www.mkemortgage.net