Buying a home: asking price, appraised value, and assessed value?

Question

I'm interested in buying a home and was wondering about the meaning (in Real estate "terminology") of these words and how *much more above appraised value the asking price can be? There's a house where the asking price is 100K but the appraised value is only 50K. Is it *fair* then? How can one determine a fair offer on such a difference?

I know the seller and he mentioned his asking price then I went to the County Appraisal distric website and looked up both appraised value and assessed value. The county I live in states the following in its tax code:

Sec. 23.01. Appraisals Generally

(a) Except as otherwise provided by this chapter, all taxable property is appraised at its market value as of January 1.

(b) The market value of property shall be determined by the application of generally accepted appraisal methods and techniques. If the appraisal district determines the appraised value of a property using mass appraisal standards, the mass appraisal standards must comply with the Uniform Standards of Professional Appraisal Practice. The same or similar appraisal methods and techniques shall be used in appraising the same or similar kinds of property. However, each property shall be appraised based upon the individual characteristics that affect the property's market value.

Answer 1

Assessed value means whatever the tax people believe the home to be worth. That is often lower than real value, sometimes a little, sometimes alot.

Appraised value is an expert opinion on the market value of a home, using similar homes recently sold as comparisons.

Asking price is just that: what the seller is asking for in attempting to sell the property.

If you really mean that the appraisal is $50K and not assessed value, you are literally paying twice what the home is worth. Not smart to do. Especially since banks won't usually lend more than the home's appraised value.

You should only offer what the home is actually worth or less, so the appraised value should be the highest amount you would pay.

Answer 2

Asking price - what the seller wants.
Appraised Value - what an appraiser says the house is worth (some people call the tax value or the assessed value the appraised value - that's wrong)
Assessed Value - the value the taxing authority is placing on the house

In your situation, I'm going to assume that you mean the assessed value is $50k. The "appraised" value will be set by an appraiser, sent by the lender after a contract has been accepted by the seller. The tax assessed value can be off by a huge margin from the actual fair market value - so the 50 might not be representative of what the house is worth.

Offer what the house is worth to you.

Answer 3

also when they appraised a house, land is usually never included in the appraisal??? If it is over value a bank might not give you a loan???
**Like they say don't fall in love with a place/home,then they (realtor),know they got you,and you will buy it at any cost...
Not too many homes in the 50k market,must be in the boonies,lol.

Answer 4

lol maybe it's a typo. A lender will not give more than the appraised value but the purchase/sale price of a home is determined by what a willing and able seller is willing to accept and what a willing and able buyer is willing to offer.

Answer 5

All the answers given are correct; however, I want to clarify that in most municipalities the Assessed value is supposed to reflect 50% of fair market value. Better check with your local municipality to find out for sure.

Answer 6

The Banks will only go appraised price. I am a loan broker and if accept this offer, be ready to put out 50G of your own.