One of the most common questions I get is about the assessment on a home. Buyers compare the asking price to the assessed value, or assume the assessed value is what the home will appraise for. 


A basic explanation of the terms are: 


The assessed value of a property is determined by the municipality. The assessed valuation determines the property taxes to be paid by the home owner. The assessed value is determined the quality of the property, values of surrounding properties, and local market conditions in the area. Taxes are based on a different formulas, depending on the municipality. A property owner may ask for a reassessment, often referred to as “grieving” their assessment.


An appraisal is value placed on a property by a licensed appraiser. It is the opinion of a home’s market value based on comparable recent sales and current listings of homes in the neighborhood. Appraisals are normally ordered by buyer’s lender to protect the lenders interest. The appraised value will be compared to the purchase price the buyer will pay for the home. If the home appraises lower than the sale price the lender may ask that the buyer put more money toward the down payment to be sure the mortgage is not more then the value of the home. 


The list price for homes on the market are determined by the seller. Market value is the price a seller is willing to sell and a buyer is willing to purchase a property. These numbers do not necessarily take into consideration the assessed value or an appraised value. Typically when an owner lists their home for sale, or when a buyer decides to make an offer on a property, their Real Estate Agent will give them a idea of the value of the property in the form of a Comparative Market Analysis. The CMA is a report taking into account what is happening in the area real estate market. Properties that are similar are compared to the subject. Properties that are active, pending sale and sold are considered to determine a value. 


The terms maybe confusing. Often the different numbers differ dramatically but each number has a different purpose. 


Do you have questions, regarding anything pertaining to real estate, I am happy to help you sort things out by finding answers. Call me anytime.



This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.