When dealing with real estate, you'll often run into three concepts that many people mix up. These are the real estate appraisal value, the assessed tax value, and the home inspection. Therefore, if you’re in the market for a new house, use the guide below to understand the difference between these evaluations.

The Tax Assessment

The assessed value of the home is used to determine how much you'll pay in property taxes. It may or may not accurately reflect the market value of your home. To arrive at a conclusion, local governments look at the cost of similar homes that have sold over the prior 2 years – depending upon the County you live in. Assessors utilize historical property data and do not normally enter a home and have little knowledge of updating or renovations unless you add additional square footage to the property.

The Home Inspection

A home inspection does not attempt to value the home. An inspector merely walks through the property and inspects it for potential problems and code violations. This normally takes place at the request of a home buyer before the closing of the deal. For instance, the inspection may reveal problems with the roof, HVAC issues, or signs of termite damage. The inspector will collect the findings in a report and provide it to the client. Depending on the findings, it may enable the prospective buyer to proceed with the sale confidently, renegotiate the terms, or walk away from the sale.

The Real Estate Appraisal

Real estate appraisals are conducted by state-licensed professional appraisers—at the behest of mortgage lenders. Lenders need an accurate estimate of the property's fair market value so they know whether to grant a loan request by the potential buyer.

An appraisal may also become necessary when dividing assets during a divorce, when working out a plan for bankruptcy, when using the home as collateral for a bail bond, or during estate planning. The appraisal involves a thorough walk-through and an evaluation of any recent upgrades or additions. It is normally much more accurate than a tax assessment, and can sometimes be used to contest a property owner's tax basis and lower their annual property taxes.

To schedule a real estate appraisal with an experienced, reliable specialist, contact Concept Appraisal Services in Littleton, CO. They have served homeowners and buyers throughout Greater Denver for more than 15 years. In addition to this, they also specialize in tax assessment appeals. Visit their website to learn more about their offerings or call (303) 506-6254 to arrange a consultation.