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. Assessed value is the amount local or state government has designated for specific property and frequently differs from market value or appraisal value. This assessed value is used as the basis of property tax and when a property tax is levied. The assessed value of real property is not necessarily equal to the property’s market value. Approximately 60% of U.S. properties are assessed higher than their current value.
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.
PROFESSIONAL APPRAISAL
Nothing determines the sale price of a piece of real estate but the price at which it sells. The ultimate value of the home is determine by the market and market conditions, which may include how many competing homes are on the market, how many buyers are in the market, and how many buyers are looking for homes in your price range and area. Additional factors include interest rates and consumer confidence, which can be impacted by economic events like a recession, or more recently the Covid-19 pandemic. 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
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