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Anatomy of a real estate appraisal

REThink Real Estate

Q: I know that the city appraises a house for tax purposes. Is this the same method that banks use to appraise homes also? A: There's a lot of confusion about the value estimates that cities generate for homes, so this is a very astute question. A city's process of estimating the value of a home for purposes of calculating property taxes is usually called a tax assessment, though some cities do call it appraisal. We'll use assessment for clarity's sake to denote a city's value estimation. In most areas, property taxes are calculated on an ad valorem, or "according to value," basis. For example, in a place with a 1.25 percent state property tax, each county tax assessor has the job of assessing the value of each home, then imposing a tax of 1.25 percent of each home's value every year, plus local or neighborhood assessments, minus any discounts or exemptions applicable. Very generally speaking, both cities and mortgage lender appraisers consider the recent sales o...

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