Some of the listings I'm looking at through Richmond.com's Web site say "priced below assessed value" and others mention a recent appraisal. I was under the impression that the assessment and the appraisal were the same thing, but now I'm not so sure. Is there a difference?

Absolutely. There is a big difference. While assessments and appraisals both offer a value on a home, they are used for different purposes, and therefore derived differently as well. 

The TAX ASSESSMENT is a value that the city or county creates by which to tax your property. This value is based on recent sales and transfers in the area, but may not necessarily consider specific improvements to the interior, condition or upgrades in the home. Likewise, it may not consider a house that is in disrepair if it's not very obvious on the exterior. The city or county uses square footage and neighborhood sales data to come up with this figure.

It is very important to keep in mind that the tax assessed value is not synonymous with market value. For example, if you recently built an addition on your home and filed the required permits with the city, your tax assessment would likely increase, since this work is evidence of an improvement. Yet had you made not-permit-requiring changes such as replacing appliances, repainting every room, refinishing hardwood floors and changing out light fixtures, the county would never know and therefore would not adjust your assessment accordingly. Even though your house is more "marketable" to prospective buyers, the tax assessment does not change. Most homeowners are satisfied with this since it means their annual tax rate does not go up either!

Now, an APPRAISAL would take notice of those upgrades that you have made.

Appraisers are licensed professionals who are contracted by a mortgage company or bank to determine the market value of a property. The bank wants to make sure the house they are funding is worth what their buyer-client has offered to pay for it. In order to do this, the appraiser generally enters the home, measures, photographs and takes note of all its features (good and bad). He or she then compiles this information with the market data available on recent sales in the area. Combining the actual facts and features of the subject property with comparable sales, the appraiser is able to get a clear reading of fair market value. This value is often very close to, if not exactly the same, that the buyer is contracted to pay for the home.

In the Richmond area, homes tend to be listed and sold at a higher rate than their tax-assessed values. Yet this is not always the case and, unfortunately, there is no mathematical formula that determines a good price on a house with respect to its tax assessment.

Word to the wise buyers out there -- when you find the house you really love, be sure to go over the comparable sales carefully with your buyer's agent to come up with an educated offering price. Just because a house is listed at a price doesn't mean it should sell anywhere near it. Do your homework and count on your agent to be your advocate for finding the best values.

Jennie Barrett Shaw is a Realtor with Keller Williams Realty and a Richmond-area resident since 1987. She helps buyers and sellers maximize their investments in real estate by serving as a knowledgeable and ethical advisor. She currently lives in Westover Hills with her husband Travis, and their two yellow labs. Questions for Ask the Agent can be submitted to asktheagent@richmond.com.

Previous Ask the Agent columns
w April 17: Choosing an Agent
w April 3: Improving chances of selling
w March 6: Refinancing
w Feb. 7: Assessments