What is the Difference Between a Valuation and an Assessment?

Individuals researching the current real estate market may wonder about the differences between a valuation and an assessment. In short, a valuation is a paid service for a professionally written report of the property, and an assessment is a service conducted by local officials to calculate and determine the property’s official tax rates. 

A property valuation may need to be conducted due to a wide variety of reasons, including property settlements, refinancing or financing a property, and dispute resolution. During a property valuation, a valuer will not review and compare the properties against others on the market. An expert valuer will review a wide variety of the properties aspects, including the following:

• Any restrictions on planning
• The property’s physical location
• The structures of any buildings on the property
• The properties zoning
• The condition and size of any buildings on the property

A property assessment is largely based on the property’s market value and used to determine the proper tax rates of a property. Property assessments should be conducted on a basis of every one to three years depending on the individual properties. A low property assessment indicates a homeowner paying less in tax, and a high assessment indicates a homeowner paying more in tax. An assessor will review various aspects of a property to come to a determination, including the following:

• If the property has been through any repairs or improvements recently
• Comparisons of the current property against other similar properties
• Determine the properties cost of replacement if needed