{"id":11482,"date":"2020-04-03T03:05:10","date_gmt":"2020-04-03T10:05:10","guid":{"rendered":"https:\/\/www.movoto.com\/blog\/?p=11482"},"modified":"2024-10-14T12:06:51","modified_gmt":"2024-10-14T19:06:51","slug":"assessed-value-vs-market-value","status":"publish","type":"post","link":"https:\/\/www.movoto.com\/blog\/assessed-value-vs-market-value\/","title":{"rendered":"Assessed Value vs. Market Value"},"content":{"rendered":"

Many home buyers get confused at the difference between \u2018assessed value\u2019 and \u2018market value,\u2019 we\u2019re here to set the record straight. While the former is the value of a property for tax purposes, the latter is the agreed home price between a buyer and seller on the open market.\u00a0<\/span><\/p>\n

What is Assessed Value?<\/span><\/h2>\n

Assessed value is the value of a property based on concrete factors, like size, location, age, and condition. These are stable criteria that are unlikely to change. For this reason, the assessed value is typically lower<\/strong><\/em> than the market value, which responds to the current market.\u00a0<\/span><\/p>\n

Why it\u2019s important: <\/b>The assessed value is the taxable value. When it comes time to pay your property taxes, this is the amount that matters. Keep in mind that there are certain exemptions and deductions, e.g. for senior citizens and veterans that can reduce the taxable assessed value.\u00a0<\/span><\/p>\n

What is Market Value?<\/span><\/h2>\n

On the other hand, you\u2019ve got the market value of a home, also known as the \u2018fair market value.\u2019 The market value can be influenced by external factors such as homes that were recently sold in the area, the location of the home in relation to schools, and the impact of construction in that area. And, of course, the market value can be influenced by the economy, interest rates, and supply and demand.<\/span><\/p>\n

Why it\u2019s important: <\/b>When applying for a home loan, banks and lending institutions typically look at the market value<\/strong><\/em>. As this amount corresponds to the property\u2019s current worth, it is what they will base the loan amount on.\u00a0<\/span><\/p>\n

How These Values Affect the Home Buying Process<\/span><\/h2>\n

Both of these numbers can influence a home sale in a number of ways. It\u2019s really important to know the assessed value of a home to determine whether the market value, or price of the home, is worth it. As the market value fluctuates a lot, you can end up getting a great deal in a buyer\u2019s market, or pay more than expected in a seller\u2019s market. <\/span><\/p>\n

Supply and demand greatly impacts the market value. With this, it\u2019s important to have an understanding of the home\u2019s assessed value so you have an idea of how much the home is worth.\u00a0<\/span><\/p>\n

How These Are Calculated<\/span><\/h1>\n

Assessed Value<\/span><\/h3>\n

The process of calculating assessed value depends on your location. In most instances, it will simply be calculated as a percentage of the market value of the home. The most basic formula is:\u00a0<\/span><\/p>\n

Market value of the home x assessment ratio (as a decimal) = assessed value.<\/b>\u00a0<\/span><\/p>\n

The assessment ratio will be based on the community you live in, and it ranges from 10-100%. Look up your county assessor online to view more info on your home’s assessed value, using your APN number<\/a> make this quite easy!<\/span><\/p>\n

Market Value<\/span><\/h3>\n

To get the market value of a home, you\u2019ll need a few professional opinions. First, your buyer\u2019s agent will create a <\/span>comparative market analysis<\/span> (CMA or \u2018comps\u2019). This is based off of recent sales of similar properties in your area.<\/span><\/p>\n

Then, you\u2019ll need an appraiser to create another report to give to your mortgage lender in order to get approved for a loan. The appraised value of your home will be based on factors such as:<\/span>
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