Market or Assessed Value and How These Two Topics Can Help You Make An Educated decision Purchasing a New Home

Looking to list your home or make a purchase? Knowing the difference between market value and assessed value can help.
According to, market value is the amount for which something can be sold on a given market. This definition does not change when thinking of market value in terms of real estate. In the realm of real estate, market value is essentially the price that a buyer would pay, andand the price that a seller would accept.

To fully understand market value, you must first understand how it is determined. Market value is determined by looking at a variety of variables. Below are a few of the most important variables to consider when attempting to pin point the market value of a home:

  • The internal characteristics play a significant role as well. The size of the rooms, the number of rooms, the age of the home, and the efficiency of the appliances are all considered when you are analyzing a home.
  • Looking at the recent sale prices of comparable homes can provide extremely valuable information. Knowing how much similar homes, in the same area, are being bought and sold for will help a great deal in picking the right listing or offer price.
  • Inventory, high or low, also plays a role in the market value of your home. Are there numerous homes listed in area, or just a select few? Are there numerous buyers looking in the area, or just a select few? As you can imagine with any market, supply and demand can alter market value as well.
  • Location, location, location. The location of a home can make or break the market value. If the location of the home is extremely desirable because of low taxes, great schools, or numerous amenities, then the market value will tend to be higher; that being said, if the location is undesirable because of a high crime rate, or below average schools, then the market value will tend to be lower.

What exactly is assessed value, and how does it differ from market value?
If you refer to, assessed value can be defined as the value of a property that serves as the basis for tax calculation. The assessed value of the home is what municipalities, usually counties, use to calculate your property taxes. An assessor will be employed by the county to look at a myriad of variables to determine the value of your home. The assessor will be looking at the recent selling price of similar properties, the value of recent home improvements, the potential rental income, and the replacement cost of the property if anything drastic were to happen.

After taking all of these factors into account, the assessor will come up with the assessed value of your home. This step of the assessment process is what differs the assessed value from the market value. Once the assessed value is established, the assessor will multiply it by the assessment rate. The assessment rate is established by the tax jurisdiction. For example, if the assessor says the home is worth $200,000, and the assessment rate is 80%, than the assed value of the home is $160,000. The local government will then use the assessed value, $160,000, to determine the property taxes.