Real Estate Q & A: How are assessments, inspections and appraisals different?

Posted by Dan Miller, REALTOR on Wednesday, June 19th, 2019 at 6:55am.

We've learned over the years that some folks can get a little confused about assessments, inspections, and appraisals - and the role each plays as part of the buying and selling process. If you're a little unclear yourself, this short overview will answer a lot of your questions.  

Seller Q and A: Mad City Dream Homes 


An assessment refers to the "value" that the local taxing authority assigns to your property. Your local assessor assigns an assessed value to your property each year, that along with the mill rate, determines the amount of property tax you owe.

As a general rule of thumb you shouldn't use your property's assessed value to approximate how much it can sell for on the open market. That's because in most cases your local assessor has never been to your property, and doesn't know the condition of your home and how it's important features compare to the rest of the homes in your area. Also, your local real estate market is constantly changing, whereas your property's assessed value is updated only once a year based on old sales data from the year before. Because of this your property's assessed value is essentially obsolete as soon as it's published.  

If you need to know your property's true value on the market, please contact us. We'll visit your home and complete a market analysis for you. We'll also share our recommendations for low-cost cosmetic updates that can significantly improve your home's value on the open market. 


A home inspection takes place as part of a home inspection contingency in your offer to purchase. After your offer is accepted, you'll hire a licensed home inspector to evaluate the physical integrity of the property. The inspection focuses on the big ticket items (or defects) that could impact the value of the home, the lifespan of the home, and the safety of its occupants.

When defects are found (for example, a failing roof, a failing furnace, or basement water intrusion), our team helps you negotiate your desired outcome with the seller. Our negotiations typically focus on requests for repairs, price reductions, closing credits, or in some cases a cancellation of your offer and the return of your earnest money.    


An appraisal is completed after your offer to purchase is accepted, as part of the underwriting process for your loan. Your lender hires a licensed appraiser who uses recent MLS sales data in order to assign an appraised value to the property. If the appraised value comes in at or above the contract price, then your lender has the financial justification it needs to continue with the underwriting process and issue a loan commitment for the sale. However, if the appraised value comes in below the contract price, this could potentially affect your ability to obtain a mortgage and close on the property. 

Sellers can guard against a low appraisal (and a canceled contract) by following our seven tips in this related article. Getting through the appraisal process can be tricky, but whether you're buying or selling, our team of experienced agents is here to help you successfully navigate this crucial part of your transaction. 

For more helpful buying and selling advice

Check out our blog articles for buyers and sellers. Or reach out to us and schedule a short consultation. We'd love to learn more about your unique situation, and help you achieve all of your real estate goals. 

This article is published courtesy of:
Dan Miller, REALTOR
Mad City Dream Homes & RE/MAX Preferred
1619 Monroe Street #1, Madison, WI, 53711

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