You have most likely heard the terms assessed value and market value when related to real estate. While they might sound similar, they actually have two different meanings and are used for separate things.
It is possible that you have received the assessed value on any home you are interested in buying. You may also have your own home appraised before putting it on the market. But what do they actually mean? Here are some of the differences between the two.
Assessed Value
When your home is assessed, the assessment is done by a professional from the local city or county. It could be done by a different government agency as well in some areas. The main purpose of an assessment on a home is to determine what the property taxes on it should be.
An assessor will look to see what other properties in the area are selling for. The higher the amount they sell for in your neighborhood, the more taxes you may be required to pay. They will see if there have been any improvements made to the home or surrounding property that might have increased the home's overall value.
Also, if you are renting the home and using it as income, this could also increase the home's assessment value leading you to pay more in taxes.
All of this is taken into account to determine what taxes should be paid on the property. You can have your home assessed without it being on the market. This is especially true if you have owned the property for some time.
Market Value
The market value of a home is determined by whatever buyers are willing to pay for properties in your area. It also depends on what sellers are asking for and what they ultimately accept. Real estate agents determine the market value of a home by looking at several factors.
Market value can be determined by the home's overall appearance. How large the property is can raise and lower its market value. If the home has curb appeal or any amenities, like a pool, or if it backs onto prime lands, such as a park, these factors make a difference in its value.
The interior of the home determines market value as well. How large is the home? How many bedrooms and bathrooms does it have? Has the home been recently renovated with upgraded fixtures and appliances? Is it a newer construction?
Market value is also determined by what other houses in the area are selling for and how many other properties are available for sale.
Share6 February 2020
Once I paid of the mortgage on my house, I decided I wanted to buy an investment property. I had no idea that the buying process would be different, but it really was. There were so many things to consider that I hadn't thought about, and even the loan application process was different. It occurred to me that if I didn't know about it, others likely didn't either. I built this site to help others see what I went through buying my first investment home. I hope that it helps you to approach the process with more confidence and understanding.
