Assess Details

To assess something, you need to conduct an assessment. An assessment helps the company or individual determine the overall worth of an asset to decide how to move forward with it. To conduct a thorough assessment, the assessor, quality assurance team, or another qualified individual considers the asset's quality, quantity, and how well it meets any agreed-upon standards.

If assessing something for risk, the actuary would assess—or analyze—someone's risk factors (like health, occupation, and age), a business's standing within the market, or the predictions of market fluctuations. Investors can also conduct assessments to determine the value of a stock, property, or the amount of taxes a business should pay. In the education sector, an assessment measures knowledge and performance.

Assessment Example

You are the owner of a successful multi-million company. Due to the company's success, you decide to expand your business. You first survey the area in which you want to open a second location. Although you had hoped to find a storefront, you decide that building from the ground up is the way to go. After finding a piece of land for sale, you get the seller's permission to hire a group of professionals for a fact-finding mission. The current appraisal price seems a little high, and the assessment (not for tax purposes) will help you figure out why and if it's a good investment.

The professionals measure the total area of the land to make sure it is correct to the listing. Then, they check the soil for any contaminants that may present a hazard to you and your team once you start building. Meanwhile, you compare prices in the surrounding area, tax rates, etc. Once they've completed their assessment, they report back to you.

The final verdict is that the seller is asking way too much for the property. The land needs an environmental clean-up, the plot is the size the listing says it is—but only half is buildable—and the surrounding market lists other plots in better condition at a much lower price. You would negotiate with the seller since he is eager to sell, but you decide to find something else after seeing the results of the assessment.

Assessment vs. Appraisal

An appraisal is an assessment of sorts, but in real estate, these two terms are not interchangeable—an assessment is not simply a concept. An appraisal refers to the process of determining the value of your home. An appraiser will look at the selling price and value of other homes in the neighborhood and area and determine your home's value accordingly. An assessment in real estate refers to determining how the government will tax the property.

Both an assessment and appraisal are important steps in determining a home's value, but you should only use assessment when referring to tax procedures. To someone in real estate, if you use assessment as a casual term to discuss how you determine the value of your home, you could be misunderstood.