The terms assessed value versus market value are very different however, each of these terms play an essential part in property value. Over time, you will learn how each value works towards the overall price, value, and market position of your property, but if you have questions now, you are not alone. Many people entering into a property purchase do not know, “What is assessed value mean towards the total value of my home?” And you may have other questions, too.
Talking to the team at the office of Jeff Barchi can answer this, and other questions about the value of your property. Because there are so many different steps involved in assessing the value of a home, you can use this simple guide to assessed value vs market value to help guide you through the process.
What is Assessed Value?
The assessed value of a property is used primarily for tax purposes however, homebuyers, and sellers can use it to compare with the market value. The assessed value is a dollar amount assigned to a specific property to measure the applicable taxes of the property. The evaluation is used to determine the value of the property and can be used for inspections, home sales comparisons, and tax purposes along with any other use by the realtors, buyer, or homeowner.
Also known as a property tax assessment, an assessed value is essential to the property over time. You see, when the home is sold the owner will need to know the assessed value to estimate the property tax bill. Even after the mortgage is paid off, the property taxes will remain. If you want to budget accordingly over the duration of your home mortgage, you can use the assessed value to help with the calculation.
What is Market Value?
The value of a piece of property is more than the price per square foot. In fact, there are many factors that come together in order to create an accurate property value. Market value is the price that a property is most likely to fetch in the open market. The forces of supply and demand will always impact your property value. However, knowing the market value, and comparing it with the assessed value of the property can help you in an open market transaction.
Assessed Value vs Market Value
Sometimes, you need to see the terms “assessed value,” and “market value” in a side-by-side comparison. Here are the top 5 differences between assessed value versus market value:
- Impact of Market Fluctuations. value is resistant to market fluctuations, and thus can be used over time. In comparison, market value is impacted by fluctuations in the local market.
- Usefulness/Purpose. The assessed value is used to calculate the property taxes that can be used over time for other purposes. In comparison, market value is used as a way to find the property sale price.
- Factors Affecting Calculation. The assessed value is a rate decided by the municipalities. In comparison, market value is related to location, size, condition, improvements, and recent transactions including property market data.
- Who Calculates It? The assessed value is calculated by a county assessor on behalf of the local municipality. In comparison, market value is usually determined by a real estate agent on behalf of a client.
- Calculated Value. The assessed value is normally less than the market value based on an assessment rate decided by the local authorities. In comparison, market value is influenced by the forces of supply and demand in the current marketplace.
It is common for people to get the terms assessed value vs market value confused when they are related to real estate valuations. Most people know that the two terms are similar, and can be used interchangeably, but you may still have questions. Understanding how the terms are different from each other is how you can make the most out of every property value, sale, and taxes.
If you have additional questions about what is assessed value versus market value, call the offices of Jeff Barchi to talk to a professional REALTOR® or team member.