When it comes to the value of a home, there are several different terms that are commonly used, including appraised value, market value, and tax value. While these terms are often used interchangeably, they actually have distinct meanings and can impact the way a home is valued and sold. In this article, we will explore the difference between appraised value, market value, and tax value of a home.
Appraised value
Appraised value is the value of a home as determined by a licensed appraiser. Appraisers use a variety of factors to determine the value of a home, including the size and condition of the property, the location and surrounding neighborhood, and recent sales of comparable properties in the area. Appraised value is typically used by lenders to determine how much money they are willing to lend to a buyer.
It’s important to note that appraised value is not always the same as the market value of a home. An appraiser may value a home higher or lower than its market value, depending on a variety of factors.
Market value
Market value is the amount that a buyer is willing to pay for a home and that a seller is willing to accept. It’s determined by factors such as the location, condition, and size of the home, as well as current market conditions such as supply and demand. Market value is typically determined by a real estate agent or broker, who will use a variety of tools and data to determine a fair market value for the home.
Market value can fluctuate over time, and may be impacted by factors such as changes in the local economy, shifts in demand for housing, and changes in interest rates. It’s important for sellers to understand the market value of their home when listing it for sale, as pricing it too high or too low can impact their ability to sell the property.
Tax value
Tax value, also known as assessed value, is the value of a home as determined by the local tax assessor’s office. Tax assessors use a formula to determine the value of a property based on factors such as recent sales of comparable properties, the size and condition of the property, and any improvements made to the property.
Tax value is used to determine property taxes, which are based on a percentage of the assessed value of the property. In some cases, tax value may be lower or higher than the appraised or market value of a home, depending on the local real estate market and the specific formula used by the tax assessor’s office.
While appraised value, market value, and tax value are all related to the value of a home, they are not interchangeable. Appraised value is determined by a licensed appraiser, market value is the amount a buyer is willing to pay and a seller is willing to accept, and tax value is the value of a property as determined by the local tax assessor’s office. Understanding these different values can help buyers and sellers make informed decisions when it comes to buying, selling, and valuing a home.