Difference Between Assessed Value and Market Value

June 29, 2020by MeritAbode0

The prices of home are not cast in stone; rather, the value of a home change depending on many factors. As a buyer or a seller you are most likely to encounter different valuations which may mean various things, the two types you’ll most likely encounter are assessed value and market value. Assessed value and market value are terms used to assign an amount to a house but they do not have the same meaning. Sadly, you could lose a lot of cash on a home deal if you don’t know how to apply each term. An important part of knowing your net worth is having an understanding of the value of the property.

What is Assessed Value and What is the difference?

Assessed value ideally is the real estate market value but this isn’t always the case. The assessed value of your home is like the baseline with various factors that are involved in the assessment of your home like the area of the property, What are similar properties selling for? Recent home improvements and any income you may be made from, say, renting out a room in the property that potentially increases its value although the overall market will play a large part in determining its value. The real market value of your home can vary a little or a lot from its assessed value, which is determined by tax assessors for the purpose of calculating property taxes.

A property appraisal is done to help ascertain the value of your house. Here the value of your house is determined by the distinct feature of your home and the recent properties for sale in the neighbourhood. The true market value of your home is based on the price that a buyer is willing to pay for a home, and that a seller is willing to accept. Various characteristics contribute to the value of your home. Real estate agents are trained to pinpoint a home’s value in the real estate market. This appraiser or agent would provide an objectively based inspection pointing out this market value. This is done by looking at a variety of characteristics:

  •  External features: selling point, exterior condition of the home, home style or availability of public utilities.
  •  Internal characteristics: Size and number of rooms, construction and appliance quality and condition, heating systems, and energy efficiency.
  •  Supply and demand: The number of buyers and the number of sellers in your area
  • Other houses for sale or rent: What similar homes in the same area have sold for recently.
  • Location: How desirable is the neighbourhood? Are the schools good? Is the crime rate low? The proximity of the house to facilities like hospitals or banks?

Homes don’t come with factory custom prices but they vary from time to time. Hence, that’s what makes buying and selling real estate so exciting or frustrating depending on your property.

The overall determinant is what the buyer and seller agree on to close the deal. There is no wrong or right market price. In lieu of the assessed value, you must have an understanding of why the property is being accessed and who is accessing the property. The assessor in some countries carries out a property assessment to examine the property in order to allocate property tax on it. The assessor, the same as a real estate agent, arrives at a value by examining the similarities between properties selling or income made from the property. In the long run, the assessor comes with home value, then that number is multiplied by an “ assessment rate” a uniform percentage that each tax jurisdiction sets.

It should be noted, however, that the market value is all based on individual perception. The number which matters is that which sounds right and what the buyer and seller agree on. The assessed value, on the other hand, pertains to the amount that a local or state government has designated for the specific property. This assessed value will be used when a property tax is levied by the government.

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Meritabode is a real estate company that specializes in sites and services-sales of plots of land, construction of affordable housing estate development in Nigeria.

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