Assessed vs. Appraised Value: What’s the Difference?
Freehold Real Estate Agent – assessed vs. appraised value?
As a Freehold Real Estate Agent, I meet tons of people who are looking to buy or sell a home who do not know the difference between assessed vs. appraised value. This, of course, makes perfect sense. I don’t go to my doctor’s office knowing anything about medicine. There is no expectation for me to know anything about medicine when I go to the doctor. And yet, so many people looking to buy or sell a home in Freehold, New Jersey are expected to navigate real estate terminology.
People are constantly telling me that they try to educate themselves about real estate jargon but every time they find the meaning to one term, they find three more terms they do not know. Things like assessed vs. appraised value cause a lot of people a lot of frustration. Not to mention, buying a home is far more expensive than going to a doctor. Buyers are expected to know a lot about real estate in order to not get scammed. (On a side note, this is a great example of why it is so necessary to work with a real estate agent. You would not try doing surgery after a lot of Google searches. Don’t think that a day on Google means you know how to buy or sell a home in New Jersey.)
The world of real estate can be very scary for someone with no experience in it. I want to address a common point of confusion when it comes to real estate. I am giving you some of my Freehold Real Estate Agent so that the home buying process can be a bit easier for you!
Assessed Value in Freehold New Jersey
So let’s discuss assessed vs. appraised value. The assessed value on a home is the value the township places on a home. In this specific example, the assessed value would be what Freehold Township, NJ says the home is worth. This value is going to determine property taxes. Both the buyer and the seller want the assessed value to be as low as possible. That’s because the assessed value is tax and does not ever benefit the seller. The lower the assessed value better in terms of what you will end up paying yearly for your property tax. The assessed value does not really consider things like what the real estate market is like. In other words, the value exists in a vacuum. It does not consider things like the state of the real estate market. Because of this, the assessed value will likely be lower than an appraised value.
Appraised Value in Freehold New Jersey
An appraised value is determined by a licensed appraiser, a third-party individual. This is considered an opinion of value. In other words, the appraiser does not benefit if the appraised value is high or low. If the buyer is obtaining a mortgage, their lender will require an appraisal be done on the property.
In order to determine the value on the home, the appraiser compares the home in question to similar homes. They collect data of homes sold in the past 6 to 12 months within a one-mile radius of the home. Then, the appraiser will find homes that are similar in age, features, size, etc. The appraiser is able to create an appraised value by looking at similar homes. The simple explanation? An appraiser does research to come up with an estimate for what the home is worth.
These two values can get confusing. Buyers sometimes feel that the home they are looking at is worth what the assessed value is. It is important to remember it is inaccurate. The assessed value is determined by the township, not by someone doing market value research. It ultimately comes down to market value. There are many factors that go into this, one being supply and demand. In the end, it is about what a buyer is willing to pay for a home.
Freehold Realtor Services
If you would like to see this blog in video format, click here. Check out my other blog posts if you are interested in learning more about real estate in the Freehold area. I cover topics like how to choose a realtor and more. And if you would like to follow my journey, then check out my Instagram page. Thank you for reading about assessed vs. appraised value. Feel free to contact me with any questions you may have!