The Difference Between Market Value and Assessed Value
Understanding the difference between market value and assessed value is crucial for homeowners, buyers, sellers, and real estate professionals. These two terms often cause confusion, but they serve distinct purposes in the real estate industry. In this blog post, we’ll explore the definitions, uses, and differences between market value and assessed value, helping you navigate the real estate landscape more effectively.
What is Market Value?
Market value refers to the estimated amount that a property would sell for on the open market. It is determined by several factors, including the property’s location, condition, size, and features, as well as current market conditions. Market value is primarily used by buyers, sellers, and real estate agents to set listing prices and make purchase offers.
Key Factors Influencing Market Value:
- Location: Proximity to amenities, schools, and public transportation.
- Property Condition: Age, maintenance, and any recent renovations or upgrades.
- Market Conditions: Supply and demand, interest rates, and economic factors.
- Comparable Sales: Prices of similar properties that have recently sold in the area.
Internal Resource: Learn more about the factors that influence property value on our Top Factors That Influence Property Value page.
What is Assessed Value?
Assessed value is the value assigned to a property by a local government for tax purposes. It is used to calculate property taxes owed by the homeowner. The assessed value is typically a percentage of the market value, known as the assessment ratio, and is determined by the local tax assessor’s office based on a set of criteria and guidelines.
Key Factors Influencing Assessed Value:
- Assessment Ratio: The percentage of the market value used to determine the assessed value.
- Property Characteristics: Size, type, and age of the property.
- Local Tax Rates: Varies by municipality and is applied to the assessed value to calculate property taxes.
External Resource: For more information on property assessments, visit the International Association of Assessing Officers (IAAO).
Key Differences Between Market Value and Assessed Value
- Purpose:
- Market Value: Used for buying, selling, and refinancing properties.
- Assessed Value: Used for calculating property taxes.
- Determination:
- Market Value: Determined by real estate agents and appraisers based on market conditions and comparable sales.
- Assessed Value: Determined by local tax assessors using a standardized formula and assessment ratio.
- Frequency of Updates:
- Market Value: Can fluctuate frequently based on market conditions.
- Assessed Value: Typically updated annually or biennially by the local tax assessor.
- Impact:
- Market Value: Affects the price at which a property can be bought or sold.
- Assessed Value: Affects the amount of property taxes owed by the homeowner.
Internal Resource: Visit our Understanding the Different Types of Property Appraisals page for more insights into how market value is determined.
How to Appeal an Assessed Value
If you believe your property’s assessed value is too high, you can appeal the assessment to potentially lower your property taxes. Here are the steps to appeal an assessed value:
- Review Your Property Record Card: Ensure all information is accurate.
- Gather Evidence: Collect recent appraisals, comparable sales data, and photos of your property.
- File an Appeal: Submit an appeal application to your local tax assessor’s office by the specified deadline.
- Attend a Hearing: Present your case to the local board of assessment appeals.
Internal Resource: For a detailed guide on appealing your property tax assessment, visit our How to Appeal Your Property Tax Assessment page.
External Resource: For additional tips on appealing property taxes, visit Nolo’s Guide to Property Tax Appeals.
Conclusion
Understanding the difference between market value and assessed value is essential for making informed real estate decisions. While market value influences buying and selling prices, assessed value determines property taxes. For accurate property valuations and professional appraisal services, contact Bellanor Appraisal today.
Contact Us: For more information or to schedule an appraisal, visit our Contact Us page.