Assessed Value Vs. Appraised Value Vs. Market Value: What’s the Difference?

If you’re in the market to purchase a home, you’ve probably seen an assessed value, appraised value and a market value in addition to the home’s sales price. What’s the difference?

Simply put, an assessed value is the value determined by a municipality or county assessor for the purpose of determining a property’s value for tax purposes. Assessors will consider many local factors, including similar property sale prices, recent property improvements and other factors like replacement cost. The assessor deducts any tax exemptions from the assessed value and that number is multiplied by an assessment rate to arrive at the taxable value for your property. A higher assessment means a potentially higher property tax bill.

An appraised value is an evaluation of a property’s value by a professional appraiser during the mortgage process. The appraiser is hired by the lender but the appraisal is paid for by the borrower. The borrower and lender will receive a copy of the home’s appraisal report. This report will include justification for the home’s given appraised value using information such as recent comparable home sales.

A market value is the price that a buyer is willing to pay for a home. This may be different than the sales prices of a home. Factors that real estate agents use to determine a sales price include external and internal home characteristics, local comparable sales, supply and demand and location. This value may be higher than the sales price of a home in the event of a bidding war.

Market values tend to fluctuate more than an assessed value. As you evaluate your home’s long-term value, it is best to consider many factors and consult a real estate agent to review historical trends for your area.

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