If you are getting ready to buy a piece of real estate, you have probably been looking at a number of different properties. The real estate agent will tell you what the asking price is for each piece you look at. However, a lending institution is going to ask for an appraisal of the property to make sure that it is worth the money so they do not lose any if they end up owning it. You may go onto a county website or to the courthouse to find out what the tax assessment on it is. Do not be surprised to find that the assessment is much lower than the asking price. Here is a bit of information to help you understand these two important figures in real estate.
Assessment
Every year, the state and local governments determine how much money they need to pay their bills. This money comes from taxes and one of these is property tax. Every homeowner must pay property taxes or risk having the government take it from them. The amount of the tax is determined by a tax assessment. This is different from an appraisal in that there is an amount that needs to be reached by the government and they will spread it among all homeowners. However, the amount of land, location, and type of buildings on it will all play into the assessed value. This value is considered to be a fair market value of your home in regards to all the other homes in your locale. The assessing agency will determine if someone needs to visit your home or if previous assessments can be used for a few years. This information is avaialbe to the public.
Appraisal
An appraisal is done by lending institutions to determine how much the property is worth. While it does consider homes in the nearby area, it does not include every property in the city or town. An appraiser will go to the property, view it from outside and go inside to see what features it has. An appraisal takes into consideration the age of things like the roof and HVAC system to determine their value. They will also look at the structure and how stable they are. Only the person or company ordering the appraisal has access to it.
Go ahead and look at the tax records for a piece of property, but do not let that determine how much you will offer for it. If you are working with a lender who has ordered an appraisal, ask if you can see it. If not, it might be a good idea for you to order one yourself.
