Assessed home value vs. appraised home value
Quick insights
- Assessed value is used for calculating property taxes, while appraised value reflects current market conditions.
- Either value may differ based on timing, unique home features or location, including local regulations.
- Knowing both values can help homeowners make informed choices about taxes, refinancing or selling.
When it comes to understanding your home’s worth, it’s important to distinguish between assessed value and appraised value. Though they sound similar, these values may differ because they are not the same type of valuation and serve different purposes. Knowing the difference can help homeowners make more informed decisions about property taxes, refinancing or selling.
What is a home’s assessed value?
A home’s assessed value is the dollar amount that a local government assigns to a property for tax purposes. Assessments are conducted periodically, depending on local regulations. The assessed value figure is typically based on factors like location, size and comparable homes, and is often lower than the market value. For example, if a home’s market value is $300,000, it’s assessed value might be $240,000, depending on the local assessment.
What is a home’s appraised value?
An appraised value is an estimate of a property’s current market value as determined by a licensed appraiser. This value is usually calculated during a home sale or refinance. Contributing factors include the home’s condition, upgrades and recent comparable sales. For instance, a newly renovated home might be appraised at $325,000, even if its assessed value is lower.
Assessed value vs. appraised value: What’s the difference?
The main difference lies in their purpose and how they’re calculated:
Purpose:
- Assessed value is used to determine property taxes.
- Appraised value is used to determine a home’s market value for sales, refinancing or lending purposes.
Calculation method:
- Assessed value is calculated using a standardized formula set by local tax authorities.
- Appraised value is based on an in-depth evaluation by a professional appraiser.
These methods can result in different values. However, a home’s value can be shaped by a variety of factors, both within and beyond the homeowner’s control. These elements are considered during assessments and appraisals and may lead to differing property valuations. Unique home features or recent upgrades, for example, may be considered in an appraisal but not in an assessment.
Additional ways to determine your home’s value
Before assessments and appraisals, there are other ways homeowners can estimate their property’s worth:
- Online valuation tools: Online mortgage tools typically offer automated home value estimates based on public data and recent sales.
- Comparative Market Analysis (CMA): A real estate agent can provide a CMA by analyzing similar properties recently sold in your area.
- Local property records: Reviewing property tax records and previous sales data can offer context for current value.
In summary
Assessed and appraised home values serve distinct functions, and the amounts can differ due to how they’re calculated. Understanding both values can help homeowners better navigate decisions around taxes, refinancing or selling a property. Both values play a role in the real estate market and various transactions.
