People typically confuse appraisal prices with assessment prices. As a real estate owner or potential buyer, it is important to understand how they differ (hint: they are almost totally unrelated!). This article will explore San Jose CA appraisal versus assessment prices.
What Are Assessment Prices
California counties charge a property tax on homes. The sum is based on a pre-determined rate multiplied by the assessed value of a property. Assessments are used specifically for levying taxes and are not related to the current market value. Thanks to California’s proposition 13, the initial assessed value will be set as fair market value at the time a property changes hands, and can rise a maximum of 2% per year after that, but can never exceed fair market value. There may be additional assessments on your tax statement, but the base rate will always be 1% of assessed value. Assessed value may be increased if you make improvements to your house (e.g. an addition) and the tax assessor will augment your assessed value by just the amount of value he deems you’ve just added to your home.
What Are Appraisal Prices
An appraisal is an analysis of the market value of a home by a licensed (and hopefully skilled) appraiser implementing specific valuation methodology. When you go to get a loan on a home, your bank will hire an appraiser to confirm that the value of a property meets or exceeds the dollar value they are lending. It is a part of their due diligence given that they will hold a significant financial burden until you pay off the loan. Appraisers traditionally use at least three other homes that previously sold in the same neighborhood as a basis for determining the value of a property.
Details On San Jose CA Appraisal Versus Assessment Prices
The market price of a property is defined by what a buyer (“the market”) is offering to pay, which cannot be precisely known for sure ahead of time. In California, buyers must be careful when associating assessed value with the market value of a property since they grow increasingly disparate as time goes by.