by A.W. Berry

Created on: March 03, 2008   Last Updated: April 27, 2011

A home may be given numerous valuations depending on 1) the purpose of the valuation and 2) the methods and techniques used by the appraiser. Home values may be determined for purposes of refinancing, or obtaining 2nd mortgages or in the pricing of a home for sale. When deciding how to value a home for sale or purchase, several forms of valuation come into play in addition to other factors such as market conditions, location, proximity to schools, utilities etc.

In terms of different forms of valuation there are tax assessments, banking appraisals, fair market appraisals, insurance appraisals, market valuations and of course individual estimation of value. This article will discuss the different forms of valuation and other conditions that can influence the price of a home outside of appraised valuation.

Types of property valuation:

Tax Assessment: Tax assessed value is typically lower than market value but varies from locale to locale. Tax assessed value may be as low as 30% below market value and thus is not always ideally considered as the selling price of a home. The tax assessed value is determined by local Government and can be a useful metric in determining the minimum value of a property.

Fair Market Appraisal: A fair market appraisal may include one or more independent property valuation estimates from bank appraisers or bank affiliated appraisers and/or independent appraisers. According to Mortgage News Daily, market appraisal may also include a "Broker's price opinion" or a "Comparative market analysis" which are estimates arrived at through the judgment and expertise of real estate agents and brokers. 

Insurance Appraisal: Insurance appraisals are performed by insurance companies in determining the cost of replacing a home in the event of a catastrophic event such as a tornado. Insurance appraisals are typically closer to market value and may take into account inflationary pressures on the cost of replacing property.

Individual Appraisal: When a person or family lives in a home, repairs it, pays taxes on it, pays the mortgage, may be familiar with similar home prices in the neighborhood etc. Consequently, they may develop an intuitive sense of a home's value simply through involvement with the home. This can lead to an individual assessment of value which may or may not conform with appraisers estimates of home value. To ensure the accuracy of such an individual appraisal, taking into account variables might be of assistance. A few such factors

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