What is the difference between appraised value, assessed value, and market value?
This was the question in our Ask A Pro segment of the Verona Press this week, but I thought I would expand on our response.
The Appraised Value of a property is a valuation conducted by a certified independent professional who visits a property and compares it to similar recently sold houses in the area. The appraiser will make adjustments to the value based on pros and cons of the subject property in comparison to the recently sold properties. This value is primarily used by lenders for financing purposes to make sure that the property is worth the amount they are basing the loan on.
The Assessed Value is a value determined by the local government and is used to establish property tax payments. Though market data is used during this process, the assessed value is generally less accurate because it is an annual snapshot without a property visit. Keep in mind, assessors are tasked with the job of valuing tens of thousands of properties. I always tell buyers and sellers to ignore the assessment when trying to figure out the value of a property.
Ultimately, the Market Value is determined by what a buyer is willing to pay for a particular property on a particular day. Keep in mind, property values vary with time and market conditions. What somebody is willing to pay today, and what somebody is willing to pay two months from now could be different values.
There is one last form of valuation, called a Comparative Market Analysis. This is an analysis done by a real estate agent, usually for purposes of determining a list price or a purchase price for a seller or buyer. Agents generally look at recently sold comparable homes, like an appraiser does to determine an estimated market value. If you have property in south central Wisconsin, feel free to contact us for a free market analysis to determine what your home may be worth.