EXAMPLE OF DIFFERING HOME VALUES
A buyer is interested in a home listed at $420,000. The online valuation determines the house is worth $440,000. Based on that estimate, the buyer offers the asking price. When a professional appraiser comes in at $400,000 and the existing tax records assess the home at $300,000, the buyer wonders why the values are so different and whether he overpaid. The home was listed at $420,000 because at that price the home would sell in a reasonable amount of time. Why would the appraised value not be whatever the buyer was willing to pay? The appraised value is the true value of the home and considers many factors, as we will cover. The assessed value is for taxes and rarely changes. It is of interest because it determines the taxes, but is not valuable in determining selling price.
PROFESSIONAL APPRAISAL
The single thing that ultimately determines the sale price of a piece of real estate is the price at which it sells. Houses are not same-priced identical cans of tuna on the grocery store shelf or shares of stock valued and traded every day on the stock exchange. Real estate appraisal (“property valuation”) is the process of developing a perspective of value for real property. This is the market value — i.e., what a willing, reasonable buyer would pay for the property to a willing, reasonable seller. Real estate transactions generally require assessments because they happen infrequently and every real property is unique in features and characteristics. An appraisal helps in various decision points. The seller can use a pre-appraisal as a basis for pricing. The buyer can use it as a gauge 8
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