Let’s be honest — the words “assessed value” and “market value” sound like they were cooked up by people who love paperwork more than pizza. But understanding the difference between these two can seriously impact your taxes, your listing price, and how smugly you sip your coffee after a great appraisal.
As your friendly neighborhood real estate agent or loan officer (yep, we’re in on this too), let’s break it down in real talk.
What Is Assessed Value?
The assessed value is what your local tax assessor says your home is worth — usually for the purpose of charging you property taxes. It’s based on a percentage of your home’s value and is determined using mass appraisal techniques, neighborhood factors, and data that may or may not be as current as your last Netflix binge.
Think of it like this: Assessed value is your home’s grade from the local government. And like in high school, it might not reflect your full potential.
What Is Market Value?
Market value, on the other hand, is what your home would sell for on the open market. It’s what buyers are actually willing to pay, influenced by:
- Location
- Condition
- Upgrades
- Comparable sales (aka “comps”)
- Whether or not your neighbor just repainted their house Barbie pink
Translation: Market value is what someone would hand you in a real-life transaction. Not theoretical. Not outdated. Real dollars.
Why Are These Numbers Often So Different?
Because they serve different purposes:
- Assessed value = tax purposes
- Market value = buying/selling purposes
It’s not uncommon for a home’s assessed value to be lower than its market value — sometimes by tens of thousands. And while that might sting a little from a pride perspective, it can actually be a blessing come tax time.
A Tale of Two Numbers (Example Time!)
Let’s say:
- Your home’s assessed value is $250,000
- Your local tax rate is 1.25%
- You’re paying $3,125 in property taxes
But in today’s market, your agent (hi, again) believes your home could sell for $320,000. That’s your market value.
So while your ego might wish that tax bill reflected a higher number, your wallet is just fine with the discount.
Why Does This Matter to Buyers and Sellers?
If You’re a Buyer:
- Don’t rely on assessed value when making an offer
- Your loan amount and appraisal are based on market value, not the tax records
If You’re a Seller:
- Your listing price should reflect the market, not your tax bill
- Don’t freak out if your home is assessed at less — that’s common
If You’re a Property Tax Enthusiast (We See You, Dad):
- You can appeal your assessed value if you think it’s too high
- This has zero effect on your market value, but could lower your tax bill
Quick Analogy: Your House on Zillow vs. Your House in Reality
Assessed value is like your license photo — functional, official, and probably not flattering.
Market value is the Instagram version — lit well, staged, and what people actually care about.
Actionable Takeaways
- Buyers: Use market comps and agent expertise to guide offers
- Sellers: Focus on curb appeal, staging, and timing to boost market value
- Owners: Check your assessment annually and appeal if something seems off
- Everyone: Remember these are two different numbers with two very different jobs
FAQs
Q: Can assessed value affect my mortgage?
A: Nope. Lenders care about market value, which is verified by an appraisal.
Q: Why is my assessed value so much lower than my purchase price?
A: That’s common. Many municipalities assess values infrequently, and some use formulas designed to be conservative.
Q: Can I use assessed value to estimate my home’s worth?
A: You could, but it might be like using a map from 1997 to find a new smoothie shop.
