whats the difference between a tax appraisal and a real estate purchase appraisal

Asked by Brandy Loftis, Tue Feb 28, 2012

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April Grossm…, , North Carolina
Wed Feb 29, 2012
Hi Brandy,

Good question! People are often confused by this terminology. A tax appraisal is the value of a property according to the government entity in which the property is located, usually the county. The evaluations are often done on average prices in the area and may not always be up to date with regard to current market prices.

The purchase appraisal is typically ordered by the bank or lending intstitution which is granting a mortgage. The individual property is measured and viewed by a cerified appraiser and then compared to very recent sales.

It's not unusual to have different amounts for the tax appraisal and the purchase appraisal. With the nationwide trend of lower values, property owners need to determine if they are paying taxes based on an amount that is too high and not realistic based on today's market.

I hope this helps!

Web Reference:  http://www.ShelterToday.com
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Tracy Santro…, Agent, Cary, NC
Wed Feb 29, 2012
In this area the local government determines the value of the property and it becomes that value to determine the annual property taxes. An appraised value is done by a licensed appraiser. The value of the appraisal is the value on the day the property was appraised. It is used with lenders to determine the current market value of the home.
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Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Wed Feb 29, 2012
For calculating the details on a mortgage we use the lesser of the purchase price or the appraised value. The tax assessment come from the PVA and doesn’t require a licensed appraiser in my area. It could be done by the Tax Assessor’s brother-in-law that knows nothing about real estate.
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Mike Kubica, Agent, Hendersonville, NC
Wed Feb 29, 2012
Brandy: Most of the answers below are correct, but I wanted to get a little more detailed for you. When an appraisal is done for a purchase, the appraiser comes out, measures the home to determine the square footage and also comes into the house to determine the overall general condition as well as the number of bedrooms, baths, and other rooms. They then compare this to the sales of other properties that are similar (comparables) that have sold recently to determine what the current value of the particular home being sold is.

In the tax appraisal, as someone else mentioned, in NC they are done only once every 4 to 8 years, are usually only a driveby to see if there are any apparent changes to the home, as well as checking for any improvements done since the last tax appraisal that building permits were issued for. Typically in a tax appraisal increases (or decreases) in value are not usually made to an individual home, but are done by a particular area. For example, if you live in a rather large subdivision, they may determine what the change in the average value in the subdivison is, based on recent sales in the subdivision, and increase or decrease the value on all homes in the subdivision by that figure. An individual property may also be adjusted based on any improvements (other than cosmetic) since the last appraisal.

In short, the real estate purchase appraisal is a determination of the value on the particular date that the appraisal is completed. The tax appraisal, depending on when it was last done, may or may not be an accurate value of the home at any given time. In Henderson County where you live, the last tax appraisal was done in 2010, and effective in the tax year 2011, so may not accurately reflect the value today.
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Art Hudson, Agent, Hendersonville, NC
Wed Feb 29, 2012
A tax appraisal is done by a licensed appraiser who works for the County. The county wants all property to be appraised for uniformity in the property tax system.

The independent appraiser is also licensed by the State of NC and most often works for the bank. The bank and FHA, VA , Fannie Mae, Freddie Mac all rely on private appraisers to establish the value of the property for loan purposes.
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Scott Riggsb…, Agent, Randleman, NC
Tue Feb 28, 2012
Hey Brandy. Both of these agents have touched on really good points. The key to remember about a tax appraisal is not only is it usually based on or started from "assumed or old " data (i.e old tax value, old square footage measurements and numbers from the county tax system, which alot of times are off), but it also doesn't take into account any improvements that have been made to the property.Some counties don't reasses values but once every 7 or 8 years! Can you imagine buying a property today for the same price that it was valued at 6 years ago? You'd either lose money because of the drop in values or make money because they haven't seen that addition on the back or the 600 square feet that's now been finished upstairs.

A tax appraiser is usually a drive by and they don't come into the house. The tax appraiser also usually isn't as keen on what true values are for each particular neighborhood or community. And most tax appraisers aren't held as accountable for their numbers as a licensed appraiser doing a report for a purchase is. But there again, one works for the bank with a serious interest in the property, and the other works for the county just trying to decide how much you'll pay them every year, along with thousands of others. Hope this helps.
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Vicky Chrisn…, Agent, Purcellvile, VA
Tue Feb 28, 2012
One is for taxes and one is for a real estate purchase. Haha. OK, you didn't want the obvious stated. Sorry. When you say tax appraisal I suspect that you really mean tax assessed value.... that is a mass appraisal. It's a "guesstimate" intended solely for the purpose of collecting a "fair share" of taxes from the owner. A real estate purchase appraisal is really about that particular piece of property - someone looks at it individually and studies the comps and gives an opinion of value which hopefully confirms that the contract price is reasonable. In most cases, it's purpose is to keep a bank from loaning more on a property than it's really worth. I hope that helps.
Web Reference:  http://www.vickychrisner.com
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Sally Benfer, Agent, Asheville, NC
Tue Feb 28, 2012
A tax appraisal is sometimes calculated off the previous purchase price of a home. The appraisal done to secure a loan is done by a licensed, credentialed professional. Many times a purchaser will secure such appraisal to ensure not overpaying for a home. Does that answer your question?

Sally Benfer
Cricket Realty
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