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Home Appraisal vs. Assessment: What is the Difference?

An appraisal is something you pay for. An assessment is something the government does, whether you want them to or not.

An appraisal typically is ordered by a home buyer’s mortgage company to confirm that the value of a home matches the value on the mortgage application. A bank doesn’t want to give you a home loan that far exceeds the actual value of a house.

Homeowners will sometimes pay for an appraisal if they’ve made improvements to their home. This helps document its new, increased value and makes it easier to qualify for a home equity loan.

The government – usually the city or county in which your home is located – assesses the value of your home to determine how much property tax you’ll pay. Most governmental agencies do assessments every two to four years, but the time span varies from area to area. In some places, you’ll never know your house has been reassessed; government officials base their assessments on property sales records, size, age, condition, location, and other factors. In other parts of the country, you’ll receive a notice in the mail saying the government’s property assessor wants to look inside your home to see if you’ve made any improvements. Every governmental agency offers a window of time in which you can dispute any assessment. Being governments, they rarely make the process easy, but many people have successfully managed to get their assessments, and thus their property taxes lowered.

On the flip side, some homeowners WANT to see an increased assessment to prove their home has more value – either due to an impending sale, plans for a home equity loan, or to protect their investment.

If you think your property has substantially decreased or increased in value, you can request an assessment. But just remember that a higher home value almost always means higher property taxes.