expert opinion of what a house should bring in its local market, i.e., its geographical area, generally an area such as a suburb or neighborhood. Appraisal value is an evaluation of a property’s worth at a given point in time that is performed by a professional licensed appraiser, based on recent similar sales. It is a crucial factor in loan underwriting and determines how much money may be borrowed on the property, and under what terms. For example, the Loan to Value (LTV) ratio is based on the appraised value. Where LTV is greater than 80%, the lender generally will require the borrower to buy mortgage insurance. Most buyers who are getting a mortgage loan will not pay over what a home appraisers for. So, good real estate agents use appraisal principals in determining the market value to determine an optimum list price. Assessed value is the amount local or state government has designated for specific property and frequently differs from market value or appraisal value, because it uses data that is older, and not as precise. In El Paso county, this is a 6 month time period starting 1.5 years ago. This assessed value is used as the basis levying property tax. The assessed value of real property is not necessarily equal to the property’s market value. In our recent real estate boom, it was almost always substantially lower than the current market value. In declining markets, it can be substantially higher. (Just FYI-I do help home owners challenge their tax evaluation, if they think the assessed value is too high, to get their property taxes lowered).
WHAT IS YOUR HOME WORTH?
The first step in selling your home is knowing the difference between value, worth, and price. Let’s examine the determining factors at work. Understanding those factors allows them to be leveraged. There are several ways a home’s value is derived.
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