Time and time again, I run into homeowners who want to bring up a past appraisal when we talk about the value of their home. However, it is important to keep a two key questions in mind when you're talking about appraisals:

1. When was the appraisal done?
In a "normal" market, appraisals are generally considered inaccurate if more than a few months old. Certainly anything more than six months old is practically irrelevant. However, in more rapidly moving markets (whether prices are increasing or declining) an appraisal that's more than a few weeks old, let alone a few months, may be out of date. Appraisals are based on the prices comparable homes are selling for in the area around the subject property. So, each time another home sells near you, the value of your home is prone to change.
What does this mean to you? While you may have an appraisal that indicates a specific value for your property, if it's not VERY recent, it's not very accurate.

2. Why was the appraisal done?
Tax appraisal: I won't get into the details here, but while tax appraisals can vary widely, in North Texas they are often at or slightly below a property's true market value. That's not to say that they can't be high, but taxing authorities tend to shoot at or slightly below market value so that they don't get a fight from every single homeowner. That's right, Homeowners in most North Texas counties have the option to challenge their appraisals. So, when a neighborhood's appraisals are coming in high, some homeowners will challenge, others will not. This can make for widely varying tax values (some high, some low, some right on) all in the same neighborhood. However, I've seen entire neighborhoods sell for well above tax roll values while others have sold entirely for well below. Ultimately, this means that tax roll values have little, if any, significance when it comes to putting a true market value on your home.
Refinance and purchase appraisals: These tend to run a little on the high side, and this is generally due to homeowners (and their lenders/appraisers) trying to stretch every single dollar out of their prospective new loan. As lending guidelines tightened up recently, so too did have the values on these appraisals, but I still see them for more than a home would really sell for (almost an "if all the stars aligned perfectly" value for your home).
What does this mean to you? While neither of these are hard-and-fast rules about tax or refi/purchase appraisals, hopefully I've illustrated that these types of appraisals can vary depending on the reason they were performed.. so they are not generally the most accurate judge of true market value.

So how to you go about finding true market value?
Sites like www.Zillow.com claim to give a fairly accurate "Zestimate" of property values. However, reading the fine print for the Dallas area, I found an error margin of almost 9%! Obviously that's unacceptable as this could have you overpricing, or underpricing, your $200K home by around $18K! Ultimately, paying to get your own independent appraisal (letting a good Appraiser know that you need a true market value) is one smart way to go. However, most homeowners prefer to get a CMA (Comparative Market Analysis) by a great REALTOR® as part of their home sale preparations. Though most Real Estate Agents are not certified Appraisers, they are the ones out in the market helping buy and sell homes every day. A great agent can pinpoint the true market value for a property based on the most current market data (sales of nearby, comparable homes) and let you know where to price your home to insure a sale at that price within the time-frame you need. A good CMA can also be used as a tool to challenge your property tax appraisal (I've prepared them for many of my clients over the years). Let me know if you have any further questions on appraisals or CMAs. There's even free CMA request form right at the top of my website (www.CaveRealty.com). Just remember that a CMA value, like an appraisal value, changes with time. If you're thinking about selling in the near future, now (Winter) is a fine time to request a CMA to get an idea what you home is presently worth... but if you won't be Selling until the Summer, expect to need a new, revised CMA (or appraisal) come Spring.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com