on May 17th, 2010Indianapolis Appraisal vs. Assessment: What’s the difference?
I’ve often heard the adage, “Your home is only worth whatever someone is willing to pay for it.” True? Maybe. Helpful? Not so much. If you’re considering selling or refinancing your Indianapolis real estate, you probably want a firmer estimate of what fair market value might be. Two ways to determine property value are through an assessment or an appraisal. Why, you might ask, are there two different methods? And what, exactly, is the difference between the two? Good questions! And here (I hope) are a few good answers.
Most Indiana homeowners recently received a property tax bill, which included an assessed value of the property. An assessment is used to determine property taxes. Your local assessor uses a formula based on recent sale prices of comparable home and other factors to estimate the value of your home. If your home’s stated assessed value seems low (or, lately, high) don’t panic. While an assessment might be useful in determining tax rates, it is probably not the best indication of your home’s true value since the assessor is often basing his estimate on outdated data that doesn’t take into consideration renovations, improvements or market fluctuations. What to do if you disagree with your Indianapolis property tax assessment.
Appraisals are usually a much more accurate estimation of your home’s value since they factor in comparable sales, condition and location of the property, size and number of rooms and type of construction. An appraisal is conducted by a certified real estate appraiser who is trained in the art of figuring out exactly what your home is worth. An appraisal is important because it affects the amount of money that you can borrow or whether or not you can get a home equity loan.
Comparable sales are one way an appraiser can determine the value of your home. This process entails looking at all of the houses in your neighborhood that have sold within a certain time frame. Your house is then “compared” to the others. An appraiser will use the sale price of these homes as a starting point and then add or subtract based on the particular features of your home. An appraiser primarily takes into account standard features such as square footage, location, lot size, garages, fireplaces, etc. Secondary features that add marginal value to your home include upgraded flooring such as ceramic tile or hardwood, upgraded light fixtures and faucets, countertops, moldings, a sprinkler system or cabinetry.
Current market value is another method appraisers use to determine your home’s worth. The appraiser determines what it would cost to build your house from scratch and uses that number to arrive at the current market value.
Another good way to find out the value of your home is to ask your Indianapolis Realtor for a comparative market analysis (CMA) of your home which shows average listing price, sales price, square footage, and other important details of homes that are on the market, pending, or recently sold in your neighborhood.