As a homeowner, here are the four different types of appraisals you need to be aware of:
1. Purchase appraisal. With these appraisals, licensed appraisers determine your home’s value in the same way a Realtor gives you a comparative market analysis. In other words, they base their appraisal on comparable sold properties in your neighborhood that were “arm’s length” transactions. By “arm’s length” transaction, I mean a sale that didn’t take place between two family members.
2. Refinance appraisal. These are based primarily on your good credit. Many refinances don’t require an appraisal, but if they do, appraisers take the priciest comparable homes into consideration so the mortgage company shows that you have more equity in your home.
3. The county assessor appraisal. In this case, the county assessor establishes value based on last year’s home values and sales data. Because of this, sometimes their market values can be off, but it’s easy to appeal a county assessor’s appraisal of your home. I’ve done it myself, and I’ve helped a lot of people do the same. By lowering the county assessor’s appraisal, you can lower your ad valorem property tax.
4. Insurance appraisal. Here, the insurance company appraises your house at replacement cost, which is far greater than a purchase price, refinance price, or county-assessed value.
If you’d like to know more about the differences between various appraisals, talk to a real estate professional. Most Realtors aren’t appraisers, but they’re very good at determining a home’s market value.
If you have any other questions about this or any other real estate topic, don’t hesitate to reach out to me. I’d love to help you.