Whether you’re deciding if you should sell your house or just want to keep tabs on how your investment in your home is doing, it’s important to understand your home’s value. This can be more difficult than you might think, since different types of valuations can vary and will indicate different things. You’ll probably come across both assessed and market values; knowing the differences between them and how they’re used can leave you better prepared to buy or sell your house.
The Difference between Assessed and Market value
At first glance, assessed and market value seem to be similar, but they’re actually two different assessments used in different ways. You may work with both of these valuations when selling or buying a home. Before doing any research into your home’s value, you’ll want to understand the details of each of these values so you can use the right figure for your situation.
What is market value?
Market value refers to the price you could sell your home for based on the current real estate market conditions. It also reflects what a buyer would likely agree to pay for the home. This value can help you to decide on an appropriate asking price for your house.
When determining a house’s market value, an appraiser will consider your house’s condition, as well as the recent sale prices that similar homes in the area recently brought. Many other factors will also affect your home’s market value. The condition of your home appliances, the style of your home, the availability of good local schools, energy efficient benefits, and more can all affect the price that a buyer will pay.
Tools like Zillow Zestimate can give you a rough idea of what your house may be worth, but these tools don’t consider current happenings and other market factors that could affect your home’s value or the interest that buyers might have in your home. To get the most accurate idea of market value, it’s best to work with an appraiser who can assess all of these factors.
What is assessed value?
The assessed value of your home is the value that your town or county will use when determining the property taxes that will be due. The assessed value is often determined by an assessor who will consider factors like the value of recent home improvements, the cost it would take to replace the property, and the values of similar homes that have sold recently.
Assessed values are highly specific to your local area, and different areas use different criteria for their assessments. To get the best idea of how your home is assessed, review the records from when you purchased your home. You should be able to access information on the property’s assessment at the time, as well as the factors that were used in calculating its assessed value.
What assessed and market values mean to you
Assessed and market values have different implications for you as a homeowner. Your property’s assessed value mainly relates to what you’ll pay in taxes. While assessed values don’t tend to fluctuate, they can come up or down when you sell your home, based on factors like home improvements and the overall real estate market. If an assessed value increases when you sell your home, you can use it to help justify your asking price, too.
In contrast, your home’s market value can fluctuate frequently. It’s still important to keep an eye on market value if you’re considering selling your home, since it can give you an idea of what you might be able to ask for the property.
How to Challenge An Assessed Real Estate Value
An incorrect assessed real estate value could lead to multiple problems. If you feel that your property was assessed to be more valuable than it actually is, you could be paying more taxes than you should be. If you’re trying to sell your home and feel that the property’s assessed value is lower than it should be, potential buyers might question your higher asking price.
You can challenge an assessed value, but you’ll need to follow specific steps to do this appropriately. Start by making sure that all of the information about your home, including its square footage, amenities, and lot size, is correct in the assessment. Ask your real estate agent to get you some comps of similar houses nearby that recently sold. You’ll need to check the assessments on those properties to get an idea of the average value of similar homes in your area.
Once you’ve prepared your research, you’ll need to call your assessor’s office and either speak over the phone or ask for a formal review. If you have facts to back up your points, an assessor may revise your home’s assessed value.
It’s important to know your home’s assessed value and market value when selling your home, but these values tell you different things. Your home’s market value can help you to price your house appropriately, while the assessed value plays a key role in validating your asking price and understanding the property taxes assessed on the home. When you know and understand how both of these figures relate, you can increase the chances of getting your asking price for your home.
Do you know what your home’s current market and assessed values are?