Appraisal vs. Assessment—Are There Any Differences?

You’ll likely need to know and understand a few key real estate terms at one point or another. And even if real estate isn’t your primary skill, understanding these terms could be significant. 

For example, you might not know why your property taxes increase or how a valuation for someone’s house is performed. Plus, defining these terms can help you better communicate with your real estate professional.

Checking out the two terms in question here can give you a better understanding of how they’re used and how they’re similar and different. Understanding the differences between the two can give you a better idea of how they’re used. Ultimately, having a better handle on these terms can help you make more informed decisions in the future.

Today, we will take a closer look at two common terms you should get to know.

Here, let’s explore the difference between appraisal and assessment. Here’s what you need to know:

What Is an Appraisal?

An appraisal is a process of determining the value of a property. It’s used as an estimate of a property’s worth. This estimated worth is generally used for lending purposes. The actual estimate may be an estimate of the current price, may hold the estimated worth as of a previous date, or maybe the estimated worth as of a future date. An appraiser typically calculates this estimated worth. That value may be used to make lending decisions or apply for financing.

To estimate a property’s worth, the appraiser may perform market research, walk through the property, and carefully review any contracts or licenses for the property. This can help get an idea of the property’s value and its ability to generate revenue.

A professional appraiser is licensed. This license is obtained through passing exams and meeting and completing annual continuing education requirements.

What Is an Assessment?

An assessment is similar to an appraisal. However, an assessment is conducted by a tax assessor. This means it’s generally performed for tax purposes. In other words, it’s not related to monetary value. Instead, it’s more of a property tax evaluation. It looks at information about the property and any exemptions or exceptions. This can provide a tax assessor with information about the property. The amount of data and forms can vary from one jurisdiction to the next.

The property being assessed is typically a residence. However, in some jurisdictions, commercial properties are assessed too.

As a real estate investor, you may have to pay property taxes. This can make it crucial to have a better understanding of this term. It can help you make more informed decisions about your property.

How Are the Two Terms Related?

Generally, appraisals and assessments are both used for property taxes. However, there are differences. An appraisal is typically used for lending purposes. On the other hand, an assessment is actually used to determine property taxes. This is why the data from an assessment isn’t typically used to help make lending decisions.

In some cases, an appraisal may be used to help determine property taxes. If the lender uses a list price to determine the property value, this can happen. Then, the lending decision is based on the property’s value rather than the property’s ability to generate revenue. An assessment can also be used to determine the property’s value.

The Bottom Line

The two terms are a little bit confusing. But they’re actually quite similar. An assessment is often used for property taxes. Meanwhile, an appraiser typically looks at the property’s value to help determine its worth. Both are forms of evaluation, and both generally are used to help determine property taxes.

Overall, these two terms are similar. You’re likely to come across them in your everyday life. You’ve got a better understanding of each of them, which can help you make more informed decisions in the future.

If you’re looking to buy a home in Folsom, we can help you. Here at Folsom Realty, Inc.,  whether you’re buying or selling your home, you want an agent that is going to put you first and offer you the right advice for your situation! We serve Folsom, El Dorado Hills, Cameron Park, Granite Bay, and the greater Folsom Lake area. Contact us today to learn more and get started.