What is the difference and why?
A property assessment by your municipality is likely undertaken to determine rates for taxation or to identify areas requiring infrastructure or services. In areas where properties are primarily identified in general terms, such as by neighborhood or by building type, it is unlikely the assessment would be an accurate representation of the current market value of that property.
How Assessments and Appraisals Differ
I often find that when people are out searching for properties and are ready to submit an offer, they can focus on the assessment value instead of looking more seriously at the immediate market sales in that specific area.
Alternatively, a bank’s property appraisal tends to be closer to a home’s market value, because a money lender needs assurance that losses could be recovered in the event of a mortgage default. Still, such appraisals tend to be conservative, as mortgage holders are not in the business of speculation. By contrast, a market value assessment by a competent real estate professional is much more likely to identify a home’s true value. It will take into account the property’s attributes, previous market activity, and current market demand.
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