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Michelle Lapierre
What Is Your Home Worth? It Depends Who You Ask..
8/16/2016
What Is Your Home Worth?
It Depends Who You Ask...
When it comes to the "value" of your home, there can be a lot of numbers tossed around during a sale, purchase, or refinance process. Understanding the differences between the valuations of your home can help you understand your home's worth.
Property Tax Assessed Value
A municipality or city uses an assessed value to determine how much property tax you are billed each year. This value is an estimated value on July 1 of the previous year. In volatile market conditions, tax assessed values may be significantly lower or higher than current market conditions. These assessments also use a technique that values groups of properties instead of individual homes. They use property sales data, land title records and municipal building permit and construction information to determine assessed value. It is not site specific. Mass appraisal valuations do not include a walk around your home and property, so the overall condition is not a consideration in the value.
Appraised Value
Appraised values are determined by a professional appraiser and provide value on a particular day. It includes an inspection of the property and will take into account property location, size, type of construction, condition, and features and finishings. To determine a value, they will generally look at comparable properties sold in the area in the last 3 months and adjust the values for any differences between the comparable sale and the property they are inspecting (plus or minus). The data is much more current than a property tax assessed value. It also is quickly outdated. Appraisals capture a snapshot in time, so even after a month has passed they may not be accurate as newer comparable sales have occurred in the area. Appraisal reports cost roughly $250 to $500 depending on the size or travel time to a property.
Realtor Estimated Market Value
When considering a sale of your property through a realtor, they will start by doing a current market evaluation. You may have seen what homes in your neighborhood are listed for, but not necessarily the sale prices. List price and sale price can be very different, so a realtor going through that data with you can be very helpful.
Realtors usually suggest a price range looking at pending sales, recent sales, and expired or withdrawn listings of comparable properties in your area. They will look at the style and size of home, lot size, age, proximity to amenities, curb appeal, interior finishes and overall marketability of your property when looking for comparable properties. A professional realtor will also consider market trends and the amount of supply and demand for similar homes in your area. These market evaluations are typically free of charge and can be a good starting point in determining the current market value of your home.
What Does This All Mean For Mortgages?
When faced with these differing values, lenders rely upon your purchase price or the appraised value, whichever is LOWER.