MINT HILL, NC – It’s common for both buyers and sellers to have misconceptions when it comes to the assessed value and market value of a home. These two terms are not the same, and in fact, they are quite different. Let’s look at the differences between assessed value and market value when it comes to real estate.
What is the Assessed Value?
In order to understand the assessed value of a property, you have to know who is doing the assessment and why. Often, this value comes from municipalities or counties placing a value on the property for tax reasons.
The assessor will look at similar properties in the area and what they sold for while making adjustments for differences, along with improvements. They may also look at any income you make from the property for renting out a room, along with a few other factors.
The value the assessor comes up with will be the assessed value of the property. This is used by the local government to figure out how much you will pay in taxes each year.
What is Market Value?
The market value of a home is figured out by an appraiser that is doing an appraisal after the home goes under contract. Your real estate agent will look at comparable properties and what they have sold for recently. The goal of the agent is to figure out the most probable price the home will sell for on the open market today and recommend a suggested list price or list price range to you.
Real estate agents will look at many factors other than just similar homes that have recently sold. They will also look at the external and internal characteristics of the home, the location, and the supply and demand of the market.
Often a comparative market analysis is used as the starting point for listing the home. It’s a suggested list price assigned by a real estate agent that has taken the emotion or attachment of the seller out of the equation to assign a possible market value to the home.
The Differences Between Market Value and Assessed Value
The market value of a home may rise and fall depending on the conditions of the local market. However, the assessed value will remain more immune to market fluctuations. In fact, in some states, the assessed value can only rise or fall by a certain percentage per year.
Since the assessed value of a property is mainly used for property taxes, it’s not necessary to worry so much about it, if you’re selling or buying a home. Instead, you want to pay attention to your agent’s comparative market analysis and later on in the process, the appraised value of the home.
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