Comparing Assessed value vs Market Value

assessed value vs market value real estate

Property values are always changing.

Since 2012, reports show that the average home has increased in value by 5% per year.

Do you know the value of your home?

There is a difference between the assessed value and the market value of a property.

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What is “Assessed Value”?

Property taxes are charged by the county in which you live. They will assess a value based on the comparable homes in your area.

This assessed value will determine the amount of property tax you pay. Typically, the assessed value of a home is less than the market value value.

You can appeal your tax bill if you feel the assessed value is too high. The county will have your home inspected again to give you a new assessment.


What is Market Value?

The market value of a home is the estimated value of a property based on comparable homes sold in the area. When you sell a home it’s important to know the current market value in order to price it in line with similar homes.

The neighborhood, square footage, number of bedrooms and bathrooms, type of flooring, and home upgrades factor into determining the value of a house.

If you’re selling your home, an experienced real estate agent can help you figure out the fair market value of your house.

Factors that impact the fair market value

  • Exterior characteristics – The condition of the exterior of a home has a huge impact on not only the market value of a home, but the “curb appeal” affects the perceived value. The condition of the driveway, gardens, patio, brick or wood siding, paint, windows, etc. will affect the value.
  • Interior characteristics – The condition of the interior, such as carpet, floors, fixtures, doors, appliances, heating and air, and overall quality of materials and construction will affect market value.
  • Supply and demand – In a sellers market, there are more buyers than homes available. Bidding wars are a normal occurrence and the value of homes increase. In a buyers market, the opposite is true.
  • Location, Location, Location – The location of a property has a big influence on the value. If the home is in a more desirable community/location the price will reflect that.
  • Square Footage – You may be able to determine the market value fairly easily if you live in a community where are the homes are similar. The price per square feet for similarly optioned homes will be in line with one another.

The Appraised Value

When you get a mortgage on a home home or refinance an existing one. The mortgage lender will have a home appraiser determine the current market value of the home.

The appraised value is the dollar value of the property used to determine the loan-to-value ratio of the mortgage loan.

If the LTV ratio is above 78% price mortgage insurance will be required.

The home appraisal needs to be at least as high as the sales price. A lender will not lend more money than a property is worth.

If the appraisal comes back lower than the purchase price, the buyer and seller must agree on a lower price matching the apprised value.

Zillow’s Online Home Value Predictor – Zestimate is a popular home search website that also provides an estimate of a home’s market value. Using a complicated algorithm they are able to predict the market value of just about every home in America.

Zillow’s zestimate is not meant to be 100% accurate, but more of a starting point to help you determine the market value of real estate.

Use Local Data to Estimate Market Value

Foreclosures: If homes in your area are being foreclosed at a higher rate than the national average, it can affect home values. Check foreclosure data to see how many foreclosures there are in your area.

Current listings: Jump on Trulia or Zillow to check current real estate listings to see what comparable homes are asking. This can give you an idea a listing price to use to keep your home competitive.

Recently sold homes: There is a difference in what comparable homes list for, and what they sold for. Zillow also gives you recently sold data so you can see what comparable homes have sold for to give you a better idea of the market value.

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