Understanding the difference between the assessed value vs market value can help you prepare to sell your home or buy a new property. The two concepts are often used interchangeably, but this is incorrect. They have different meanings, and serve a separate purpose. When it comes to selling your house or buying a new property, it can be difficult to navigate all the jargon of the real estate world. That’s why we are here to help you. Terms such as assessed vs market value, and what the difference is between the two are very common and are two which also cause a lot of confusion, so we have broken this down for you.
To help you better understand assessed vs market value, here is everything you need to know.
What is Market Value?
The market value of a property considers the current housing market so the value of the property at a certain point in time can be calculated. This is typically determined by appraisers, using factors such as the size of the property, the condition of the property, and the price that comparable properties have sold for recently. This price is agreed upon by the buyer and seller. The market value will fluctuate depending on the conditions of the local and wider housing market, features and upgrades of the property, and the economy. The property will be evaluated based on these factors, as well as the exterior, interior, location, the local and wider housing market, and more.
The market value is a figure that is important whether you are selling a house, or buying one, as it determines how much the property will cost.
Exterior Condition
Curb appeal is vital when it comes to considering the market value of your property. This includes the way your home is presented, the size of your assets, the style of your home, and the conditions of the exterior, such as the roof and landscaping.
Interior Features
The features that the property’s interior has are of importance to the market value. This includes the square footage, the number of rooms, energy efficiency, heating systems, upgrades, the condition of the decor, and more. In some cases, the appliances may also be taken into consideration.
Supply and Demand
For your home to be valued at a good price, there needs to be demand. However, it also has to be balanced with the supply of properties. If supply is low, then the market has too many buyers and it is a sellers market. This will mean the value of the property may increase. If there are more sellers than buyers, then asking prices are generally lower, as it is a buyer’s market.
Other Properties for Sale
Your property has to be compared to similar ones on the market, to gain a more accurate market value assessment. This is because it gives real estate agents and appraisers a better idea of what supply and demand is like. When they know what is attractive to buyers and what prices properties are going for, they can determine the value of your property.
Location
Location has a huge impact on the market value of your property. This is due to a range of factors, such as the safety of the area, the convenience of local amenities, proximity to schools and main roads, the local economy, and much more.
What is the assessed value?
The assessed value of your property is calculated differently from market value and has a different purpose. The assessed value is assigned to a property to determine the amount of property taxes owed, which is assessed by a local tax official. It uses some of the same factors as the market value, such as the size and condition of the property, but it is also measured against certain government criteria.
Assessed value calculations
When the assessed market value has been calculated, the assessor will complete their assessment by multiplying the figure by the assessment rate. The assessment rates are different depending on which area the property is located in.
Assessed value disputes
Many homeowners would prefer that their property tax bill be lower than the assessed value, so they will dispute it by submitting an “application for tax abatement” claim. This claim process requests that the property assessor reviews the value again. In some cases, solicitors may be involved.
Understanding the difference between the assessed value and the market value is important for both buyers and sellers. Contact Venture One Realty for more help.
