Anatomy of a real estate appraisal

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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.