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Do Appraised & Assessed Values Impact Market Value?



What is the difference between assessed and appraised values? How do they impact the market value of your home? I’ll go over everything you need to know today.


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Our VIP client Daniel sent in a great question that I would like to answer today: “What is the difference between assessed and appraised values? Do those values have an impact on the market value of your home?” 

Thanks for your question, Daniel! A $25 gift certificate is coming your way. 

Now, there are three different types of values in real estate: assessed value, appraised value, and market value. 

The assessed value is used by your bureau, county, or municipality to determine your property taxes. The assessor uses common appraisal tactics such as neighborhood drive-bys, recorded sales (although sales price is not on the public record in Alaska—we use voluntary sales information), and property tours. 

In Alaska, you will get a notice in the mail asking you what you paid for the house and what kind of financing you used. This is voluntary information; you don’t need to fill out the form and you don’t need to invite the assessor into your house. However, if you think your assessed value is too high, it can help to have established communication with the tax assessor. 

The assessor takes that value, multiplies it by the mill rate for your area, and subtracts any tax exemptions in order to determine your tax obligation. 

The appraised value comes into play when you finance your home purchase through a mortgage. The lender will hire a third-party appraiser to determine the value of the property. The appraiser is the eyes and ears for the mortgage lender; they mitigate the risk for the lender and justify the contract sales price for the loan. 

Since the Dodd-Frank Act, there have been many changes in this process and a push to make those appraisals more conservative. As a result, appraisals rely more on an equation rather than local market knowledge; that math problem doesn’t always work because you might be comparing apples to oranges. 

The market value of your home is dictated by market conditions like supply and demand and the condition of your home. The market value also depends on your listing agent’s negotiation skills. 

Both the assessed and appraised values have impact on the market value. However, the appraisal has much more bearing on market value, especially since 90% of home sales are financed by a lender. 



The appraised value has more of an impact on your market value.


If an appraisal comes in low, the buyer has the ability and leverage to negotiate the sales price to a lower value. In many cases, the appraisal sets the market value. 

If you have any other questions, send me an email. If I answer your question with a video, you will receive a $25 gift certificate. Please don’t hesitate to reach out to me. I look forward to hearing from you!

What Happens to Earnest Money When a Deal Falls Apart?


When a deal falls apart, what happens to the earnest money? We’re going over that exact situation today.

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 Looking to sell in Alaska? Get a free Home Price Evaluation


Today we are answering a question from VIP client Rick Swanson. He asked, “What happens to my earnest money if my home sale falls through?” That’s a great question, Rick. We’ve got a $25 gift card coming your way. Now let’s get to the answer.

Obviously, this isn’t the ideal situation to be in. Let’s start at the beginning. Earnest money is a good-faith deposit that a buyer makes when they write an offer on a home. This is the consideration at stake that makes the contract valid. This sum must be secured in the form of wired funds, a certified check, or a personal check. Cash won’t work for the bank.


Now, the purchase and sale agreement details the obligations for both buyers and sellers. When one party doesn’t perform their obligation, we can get to a point where the buyer and seller agree to disagree and the deal falls through. 

When this happens, we execute a rescission agreement. This requires both parties to agree on earnest money disposition. We identify why the deal is falling through, where the earnest money goes, and make sure all bills are accounted for. Unpaid bills are usually taken out of the earnest money.

If both parties cannot agree on a solution, there are a few different remedies. Here are the possible solutions:

1. The broker holding the earnest money can dictate the disposition of the earnest money and decide who they want to give it do. 
2. Mediate internally. This is the method I prefer.
3. Hiring a professional mediator to work with both parties to come to an agreement.
4. Hiring an arbitrator to give a binding agreement for the disposition of the earnest money.
5. Let the buyer and seller duke it out in a court of law.



I prefer internal mediation.


A good Realtor should be able to help you avoid this type of situation by setting realistic expectations and staying in constant contact. If you do get into a situation like this, however, they are the best people to help you out. If you have any questions for us, don’t hesitate to reach out to us. If we pick your question, we’ll send you a $25 gift card, too. I look forward to hearing from you.

The Difference Between Short Sales and Foreclosures



There are a few major differences between short sales and foreclosures. Here is what you need to know about each term.

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Whether you’re a home buyer or a seller, it’s important to know the difference between a short sale and a foreclosure. Today, I’d like to break both terms down for you.

A foreclosure is a term used to refer to a home that has been seized by a lender after the homeowner has failed to make full principal and interest payments on their mortgage. This allows the lender to seize the property, evict the homeowner and sell the home as stipulated in the mortgage contract.

Short sales are different from foreclosures. A homeowner, is considered “short” when the borrower owes more on their property when combined with closing costs and commission, than the property is worth in the current market.  A short sale may allow eligible borrowers to sell their home for less than the amount owed on the first mortgage. In doing so, the borrower may be released from their obligation to pay back the first mortgage under its original terms.

This sounds easy enough, but a short sale can be a complicated process. I’d recommend a listing agent who is a certified distressed property expert, as it can be very arduous to close a short sale.


A short sale can be a complicated process.


A short sale may allow a homeowner to avoid foreclosure, but it is not a “get out of my mortgage free" card. In reality, the homeowner must have their legitimate financial hardship approved by their lender in order to be released from the mortgage obligation. Acceptable hardships include loss of a job, death of a spouse, severe illness, divorce, mandatory job relocation or military PCS, or medical bills, to name a few.

If you’d like any more information on short sales versus foreclosures, simply give me a call or send me an email and we’ll send you our guide to short sales and foreclosures absolutely free. In the meantime, don’t hesitate to reach out to me with any other questions. I look forward to hearing from you!