Reason: Property assessments are broad ranges done by counties and cities for tax purposes. Where I live (Fairfax County, Virginia) the county considers an ACCURATE tax assessment to be something within the low 90% range of actual value. So a property assessed at $100,000 might be worth as little as $92,000 or as much as $108,000, and still be considered accurate by the county. And that's pretty typical across the country. You tell me: Would you like to pay $100,000 for a property worth only $92,000? No, I didn't think so.
How much will the bank finance? It depends. Check with a good mortgage broker. Right now, the answer is anywhere from 80% to 100% of the fair market value of the home. Eighty percent for most typical, standard mortgages. 96.5% for FHA loans. And 100% for VA loans.
If you're considering buying someone out, there are two ways to establish value. First, you can have a Realtor do a CMA (a comparative market analysis), comparing that property to others that have recently sold. That's free. Or you can pay an appraiser--maybe $300 or $400--to do an appraisal.
One thing to keep in mind is that if you're going to be applying somewhere for a mortgage, then you'll have to pay for an appraisal anyway. The lender will require it. So I wouldn't really encourage you to pay for two appraisals. Best route, if you and the seller are comfortable with it, is to have a Realtor do a CMA on the property to establish value. However, the seller may ask for a formal appraisal. If so, that's fine. What you need is a reliable number you're both comfortable with.
Hope that helps.
Insured value - how much the insurance company thinks it will cost to replace your home.
note - most homeowners are underunsured.
Assessor's value - changes at point of sale or periodically - in LA County every three years properties are re-assessed. The assessor wants conservative values so the values (and therefore taxes) do not fluctuate too much.
Market value - how much someone would be willing to pay for your property
Appraised value - based on the values of comparable homes that have closed escrow in the last three to six months - so those values tend to follow behind market trends. If the values are going up, then the appraised value will likely be a little low. If values are going down, a little high.
The amount of loan is also based on your personal situation - debt, earnings, FICO, etc. Talk with a lender.
When we had a real estate market going up it was common for the town tax bill to be under the selling price. Now we have real estate dropping. Do not be surprised if the taxed value is above the selling price.
Most towns (none?) do not have a re-evaluation every year or 6 months as it is very expensive to do. It could be every 5 or 10 years. A lot can happen in that time.
Current Market Value(CMA) is what determines the value of your property for sale or refinance.
A bank appraisal is very similar to a CMA except yhe licensed appraisor charges you for the service. CMA's are done by Realtors at NO fee.
When you are saying buy someone out, can you elaborate this? You own a property and want to pull a home equity line of credit from it?