Real Estate Terms: Assessment vs. Appraisal
Both of these terms are fairly commonly used in a variety of ways across the spectrum of normal life. Their use in the field of real estate, particularly among non professionals, can therefore be nebulous. It`s worth exploring the distinction because only one of these words is, in my opinion, useful for estimating the value of a property.
The term ‘assessment‘ as I encounter it in my daily work refers to the tax assessment of your property. This is, as I see it, part of the local governement’s way of distributing the cost of their budget in a fair way among the various property owners. (Some will no doubt want to criticize the governement here because I used the word ‘fair’. That’s a different conversation.) Assessments are usually ball park accurate but sometimes way, way off which is something I explore here and here.
As for ‘appraisal‘ it refers to someone being hired to come and look at properties inside and out and compare them to other properties in a detailed manner that combines the experience and knowledge of the professional from having been through so many properties before with the data on hand that is specifically chosen to compare the property with. ‘Appraisal’ usually refers to cases where someone from a property appraisal firm is hired. Realtors like myself will usually use words like ‘Comparative Market Analysis’ (CMA) or something like ‘Market Value Estimate’.
I’m sure there is a Lawyer somewhere who will tell you that these CMA and Market Value Estimate are distinct from the term appraisal. I must say however, that from what I’ve seen, it’s the old “You say potato, I say potato. You say tomato, I say tomato.” And yes, they all sounded the same in my head too, at least until I started overthinking it.
The short of it: Assessment generally refers to the number issued for tax purposes which aren’t so accurate for the purposes of pricing a property. Appraisal is done specifically with as much accuracy as one can reasonably expect from a professional who is focused on that task.