By Vanessa Saunders – Founder & CEO – Global Property Systems
In the real estate world, the terms appraisal and assessment often come into play, especially when discussing a property’s valuation. For a layman, these terms might seem interchangeable, but there’s a clear distinction between them, and understanding the difference is crucial, especially for those working directly with property values, like a Certified Pricing Strategy Advisor (PSA).
Understanding Appraisals
Definition: An appraisal is a professional evaluation of a property’s value based on various factors. A licensed appraiser typically carries this out.
Purpose: It’s often required by lenders before they will approve a mortgage loan. The appraised value ensures that the loan amount does not exceed the property’s true market value.
Factors Considered: Appraisers look at recent sales of comparable properties, the property’s condition, the neighborhood, and various other factors to determine the property’s value.
Timing: Appraisals are typically conducted at a specific point in time, often when a property is being sold or refinanced.
Understanding Assessments
Definition: An assessment is the valuation of a property for taxation purposes. It’s usually carried out by local government officials known as assessors.
Purpose: The assessed value determines how much a homeowner will pay in property taxes.
Factors Considered: Assessors often use mass appraisal techniques, looking at general data like property type, size, and location. They may not take into consideration the specific condition of an individual property.
Timing: Properties are usually assessed on a regular cycle, varying by jurisdiction, such as annually, bi-annually, or less frequently.
The Valuation Vexation
With such distinct purposes and methodologies, discrepancies between appraised and assessed values are common. Homeowners might be vexed when they see their house appraised at one price yet assessed for tax purposes at another. This can lead to confusion, especially when trying to sell a property or dispute a tax bill.
Enter the Certified Pricing Strategy Advisor (PSA)
PSAs play a crucial role in bridging the gap. As a PSA:
* You understand both the appraisal and assessment processes and their implications on property pricing.
* You’re trained to interpret current market trends and determine the most appropriate pricing strategy for a property.
* Your expertise ensures that properties are priced right from the start and align with the perceived value in the marketplace.
Why Every Listing Team/Agent Should Have a PSA Certification.
1. Expertise in Pricing: A PSA understands the intricacies of local markets and can price homes competitively.
2. Interpreting Data: With their skill set, a PSA can dissect vast amounts of data and pull out the most relevant pieces to create a comprehensive pricing strategy.
3. Value Proposition: A PSA brings added value to a listing team, ensuring that homes are priced to sell quickly and for the best price, optimizing seller returns.
In Conclusion
While appraisal and assessment serve different purposes in the real estate valuation spectrum, understanding the distinctions and having a PSA on your team ensures a streamlined, educated approach to property pricing. As real estate transactions evolve, the role of a PSA becomes even more crucial, bringing clarity to the valuation vexation.
Would you like more detailed information on any of these sections? Get in touch with GPS, and we’ll be happy to help.
