Assessed Value vs. Market Value

Assessed Value vs. Market Value - Assessed value is the valuation placed on property by a public tax assessor for purposes of taxation. It is not the same as Fair Market Value. Fair Market Value is the agreed upon price between a willing and informed buyer and a willing and informed seller under usual and ordinary circumstances. It is the highest price estimated in terms of money which the property will bring if exposed for sale on the open market with reasonable time allowed to find a purchaser who is buying with full knowledge of all the uses and purposes to which the property is best adapted and for which it can be legally used.

Homeowners like when their homes' "market values" steadily increase every year, because it helps to raise their net worth. These same homeowners dread when the "assessed values" of their homes also increase, which most likely translates into higher property taxes.

In California, the tax collector may not change the assessed value of a residential property until the property is transferred. This is a protection known as Proposition 13 protection, named for a public referendum that initiated the law. However, if the market value should fall below the assessed value the homeowner may petition the tax collector to lower the assessed value.

Depending on what state you live in your assessed value can change when you do home improvements. When you get permitted they re-assess your home.

The assessed value is nearly always out of date by the time you get it. Each state has different laws determing what date the estimate of value is to be determined for.

A realtor will tell you the Fair Market Value is the highest price agreed upon. Most underwriters and appraisers define it as the most likely price to be agreed upon. That's why underwriters insist upon several comparables in the appraisal report, and don't usually just go by the sale price.

Petitioning the value is really a simple process. There is usually a certain time during the year where the appraisal district will hear your petition and render a decision.

The county determines your assessed value and an appraiser determines your market value.

It is also good to know what percent of valuation your city or town uses to determine tax rate. You can find this out by looking at your tax bill or contacting your town or city assessors office.

Homes Market Value - In the real world, very few individuals order appraisal reports to establish an offering price or to substantiate a purchase price. At the point that an offer to purchase (in a typical residential transaction) is made, the price has been set by other parties, not the purchaser. The price has been determined by the seller, who wishes to obtain the highest price possible, or the agent, who receives a percentage of the price as compensation and often represents the seller in the transaction.

There are different types of housing values available. One type of housing value is the assessed home value which is assessed usually by your county auditor. Usually your assessed home value is less than the actual market value of your home may be. This is usually a good thing because the assessed value of your home is generally the basis for your property taxes.

Often, the asking price for the home is based upon comparable sales in the area - similar homes that have sold recently. Using the selling prices for those homes, they can determine what the home should sell for, and price the home accordingly.

The sellers realtor's job is to do market analysis and price the property accordingly. If the sellers realtor did there job correctly then the asking price should be a correct asessment of value.

Before buying (or selling) it is wise to do some homework and look at what similar homes in your neighborhood or town have sold for recently. This information is available at county recorders offices, town offices, and from some websites. Of course, the ultimate is to have an appraisal done by a professional appraiser. This will be done anyway before any lender provides the purchase money loan.

There are several online sites that can give you an estimate of your home's value. However, whether you are buying or selling, a real estate agent has access to the latest sales data and can give you a more accurate value for your home.
If you don't already have a real estate agent, call me and I can recommend one. 888-418-4467