Assessed Home Values Vs. Market Value

Let’s set the record straight – there is very little correlation between a homes assessed value and it’s market value. The two figures in most circumstances, are very different. There is a lot of confusion about these two terms. They are often used interchangeable, and that adds even more confusion. So, let’s take a look at each.


A homes assessed value is a measure for a municipality to collect an amount of taxes that will appropriately cover the state and local charges to the city or town. This can cover police and fire protection, park maintenance, refuse collection and street upkeep, among other things. Most people understand that Real Estate values can go up or down depending on the market. What is misleading is that many people also believe that as values increase or decrease, their taxes will do the same. Not true. The assessment of a house is only useful for the municipality working to cover it’s annual costs.

Often times, the assessed value is lower than the the market value but only because it takes time for the municipalities to catch up to the changes on the marketplace.


So what about the market value? The market value of a property is nothing more than what a buyer is willing to pay for it. A Real Estate Agent will use recent sales in the area that are similar in size and scope to determine a list price, but it always comes back to what a buyer is willing to pay for it if the house was listed on the open market.


And now, to add even more confusion to the mix, there is the appraised value. A home buyer who is planning to finance the purchase of a home with a lender will have an appraisal of the property completed prior to closing on the house. Most lenders will require it.

A professional appraiser conducts a home appraisal using comparable sales to arrive at an appraised value of the home. Lenders want verification from a third party that indicates the home value is equal or higher than the purchase price. More often than not, the market value and appraised value are very similar since both are based on recent sales data and the condition and location of the home.