Buyer’s Guide To Property Value Assessment
When looking to sell or purchase a property, whether for investment or residential purposes, you may have some questions about property value assessment. For starters, it can get confusing as there are three different types of values to consider: Fair market value, appraised value, and assessed value. In this article, we show you how to make sense of these three different figures when it comes to property value assessment.
Fair Market Value
This figure refers to how much your property could sell for under typical market conditions. That’s not to say you can expect to get this exact figure when you sell your property, but it does give you a good ballpark range. This takes into consideration several factors including the location, size, and condition of your property. Fair market value is directly tied to buyers’ demand and gives you an idea of how much buyers are willing to pay for a property like yours.
A professional appraiser gives a property its appraised value, and this is often a necessary step before obtaining a mortgage. This value is similarly affected by market conditions, such as the demand for houses in the area as well as the size and condition of the property. The appraised value may turn out to be different from the fair market value as appraisers may not view a property in the same light as a potential buyer, seller, or borrower.
The assessed value of a property is determined by a government accessor who presides over a specific tax district. This value can be a percentage of the fair market value of your property; however, keep in mind that it has no bearing on how much your property would sell for in the free market. The assessed value simply indicates how much you can expect to pay in property taxes annually. Your home may end up having a lower assessed value if you qualify for certain tax exemptions, especially if you are an owner-occupant.
The market value of your property can affect its assessed value, and this includes factors such as its condition and quality, size, location (suburbs vs. rural, beachfront vs. downtown, for instance), as well as any special features it may have. Some examples of additional features that can raise a home’s value include a pool, a home gym, or a guesthouse.
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