Home Value, Appraisal, Assessment - Which One is Right For You?
As you get curious about your home value and start to do a little research online, you probably see a lot of different terms thrown around: home assessment, home appraisal, comparative market analysis, property value, home value, etc. They all kind of sound the same, but actually hold some basic differences.
First off, home value and property value can be used pretty much interchangeably. Property value just sounds more encompassing because it includes the land on which the house is located. Home value should take into account the same thing, it just sounds like it only deals with the house itself.
Getting a home appraisal or assessment does give you your home value, but it comes from 2 different entities with 2 different motives. An appraisal is something you pay to get done – you higher a (hopefully) neutral third party to evaluate your house and come up with an accurate home value. In most cases, to qualify for any kind of home equity loan, you must have a home appraisal done. It's most often done after improvements are made to a home.
An assessment on the other hand, is when the government (usually the city or county your property is located in) assesses your home value in order to determine how much property tax you should pay. Most governmental agencies do home assessments every 2 to 4 years, but that span can vary from area to area. In some areas you may never even know your home was reassessed because the government will base the home value on property sales records, age, condition, size and other factors of the home. In other areas officials will send a notice that an assessor needs to see the inside of your home to see if any improvements were made which may affect the home value.
Every governmental agency offers a window in which you can dispute their assessment of your home value. Some homeowners want to see an increased assessment because they may be considering selling, they have plans for a home equity loan, etc. Other homeowners prefer their home value to remain pretty static if not lowered when assessment time rolls around, so that their property taxes won't sky rocket.
Keep in mind, an ASSESSMENT will ALWAYS affect your property taxes, where as paying to get an appraisal of your home value won't necessarily do so because the government may never know about it. The two can also be used hand in hand. For example, if you think the government assessed your home value too high, you can pay for an appraisal that might lower your home value and therefore your property taxes. Of course, you do run the risk that the appraisal may wind up being similar to the government's assessment.
Another term that is often used along with home value, assessment and appraisal is a comparative market analysis or a CMA. Getting a CMA done adds yet another third party to your home value search: a real estate agent. A CMA is an informal assessment of a property's market value, usually done to generate a fair listing price if a home is selling. Real estate agents figure out your home value by comparing it to similar properties that have sold in the past year. For more accurate home value information, real estate agents will visit the property and do their version of an appraisal and than adjust the price based on similar homes that sold and come up with a comparative market analysis: basically, what you could expect to get your home for if you put it on the market.
There are many different ways to get an accurate home value, but the way you go about it should be determined by what exactly you want it for. If you're thinking of getting a home equity loan, go for an appraisal. If you think your property taxes are too high, you may want to contact a governmental assessor AND and appraiser to get your home value in case you need to dispute the government's assessment. On the other hand, if you're thinking of selling, or you're just curious and looking for a free home value report, go with a real estate agents.
There are plenty of sites online that offer free home value reports and get you hooked up with a Realtor. You don't have to be selling, just willing to talk to an agent who is then going to follow up with you from time to time in an effort to win your business. Their home value report will be just as accurate as an assessor or appraiser, and if you play your cards right you might get some freebies from a real estate agent, along with that home value report you ordered!
