Assessed value and fair cash or fair market value are ways to assign an amount for a home, but they are not one and the same. The purpose of the estimate, the people assigning the value, and the time frame involved are different. You could lose a lot of cash on a home deal if you don't know how to apply each term.
An assessment is done for taxation purposes, while a fair market evaluation comes into play when you buy or sell a home. An assessment estimates the home's value to establish its property tax rate bracket. On the other hand, a fair market report has nothing to do with taxes. It's there to set the highest selling price for the property.
Who Does It
Assessments can only be performed by local government tax assessors, while fair market valuations are normally performed by a certified real estate appraiser. Since the purposes vary, estimates made by each party can't be used by the other. Banks, financial institutions and people in the home market commonly hire appraisers to get a fair market value.
Time of Estimate
The city or municipality sets the schedule for assessments. They're done periodically, but most governments squeeze them into a very limited time frame. The government won't update them immediately either, which is why these values commonly don't reflect the home's true fair market value. That's not the case with fair market valuations, which can be performed all year.
The procedure to get the studies done differ as well. You can get the assessed value of your home for free all year from your local tax assessor's office. To get the fair market value of your home, find records of recently-sold similar houses in your area. You can also hire a certified appraiser to get a reliable estimate of fair market value.
Property Owner's Reaction
An increase in the fair market value of a home is treated as good news by its owner. The appreciation translates into more equity and a potentially higher selling price. On the other hand, if the assessed value goes up, the owner's happiness level might go down. That change usually means property taxes will go up the next year.
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