Whether you’re buying a home or selling a home it’s important to know what it’s worth. As with many specialized industries, real estate also has terms and procedures that not everyone is familiar with. One such has to do with the difference between the assessed value and market value of a house. If you are not sure about this, here is the difference.
Market value is the estimated amount active buyers would currently be willing to pay for your home. Your home’s market value is determined by an appraiser, who is typically hired when your lender is deciding how much money to provide in a loan or you are setting the list price when putting your home on the market.
Market value is based on the expectation that the property would sell during the period the value is calculated. Market value is often based on recent sales of similar properties and is key to ensuring the number is as accurate as possible.
Assessed value, on the other hand, takes the market value and puts it in the context of your property taxes. In many counties throughout the U.S., assessed value is a portion of the market value, calculated as a percentage of the market value of the property. As a result, the assessed value of a property is typically lower than appraised market value.
Market value even becomes part of the calculation of your home’s assessed value. But because assessed value is used for the sake of calculating how much you owe in property taxes, the assessed value is also based on laws of your state, county and even city.
Just remember that the assessed value of a house is more for tax purposes than sales. For sales it is the market price that will be important as that is what a house is expected to sell for.