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In reality, about the only thing in common between a real estate assessment and a real estate appraisal is that they are both used to arrive at a value for a given property. Because they are used for different purposes and calculated differently, they will often be little similarity between an assessed value and an appraised value.

Assessment is the process of establishing a property value on the basis of which property taxes are levied. It is carried out by inspectors from the local authorities who may or may not be qualified appraisers and rely extensively on public records. As most of us know, public records are rarely up-to-date and this will be reflected in the assessment. If you have reason to believe that your house has been overvalued resulting in payment of excess property tax you can prefer an appeal for a review of the assessment. The assessed value has little relevance for other purposes and is generally not acceptable as a basis for commercial real estate transactions.

The value that is generally use as a basis for actual transaction whether a sale or a purchase or a mortgagee is the appraised value established in an appraisal carried out by a certified appraiser. For instance, home sellers may get an appraisal done in order to establish an asking price though any competent realtor will provide this. Lenders will almost always require an appraisal to be performed by an appraiser on their approved list.

Factors that appraisers take into account. The most critical factor that determines the value of a house is the location. Location together with other basic factors such as built up area, age, number of rooms, condition and so on affects the valuation significantly. The appraiser will also take into account any home improvements that have been carried out such as flooring, tiling, kitchen refurbishment and so all though these may not have a major impact on the value.

Methods of appraised valuation: appraisers generally begin the process of valuation with a thorough inspection of the home and neighborhood. Once he has taken note also the pros and cons of the property, he can use any of the following methods or a combination thereof:
- Cost. He will establish what it would cost to build a similar home from scratch taking into account factors such as cost of material and local labor. This would actually represent the high end of the valuation since your home is not brand-new
- Sales value. In this approach the appraiser gets to know the strengths and weaknesses of the neighborhood and then examines the prices at which local properties have recently sold to provide a base for establishing a sales value
- Rental value. In this approach the appraiser establishes the rental value of a similar income property and color using discounted cash flow is, establishes the net present value of the home.
What he would do in practice is to use a combination of these methods and then exercise his judgment to arrive at a final value.

Remember at all times that the appraiser is a quantified independent professional who can be counted on to render an impartial opinion, no matter on whose behalf he has been employed.

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