Tax bills went out to home-owners recently and the values that were listed in those bills are fresh in our minds! With that, we thought it would be a good time to chat about the difference between assessed value and market value. There can be a big difference! 

Assessed Value = Monetary value assigned to a property to measure applicable taxes. 

Market Value = the amount that your home could sell for in the CURRENT market. 

Assessed valuations tell us the value of a residence for tax purposes and takes similar home sales into consideration. While it’s possible that this valuation could be done annually, in some municipalities, there are years between valuations. 

Many municipalities employ an Assessor to determine assessed values of the properties with the end goal of levying property taxes. 

When an ASSESSED VALUE is determined, the major factors that the Assessor takes into account are: 

  • Similar properties and the amount they have sold for.
  • Recent improvements made on the properties, and replacement costs of the home (if the home would need to be built again from the ground up). 

The assessed value is then obtained and, after deducting any tax exemptions you qualify for, that number is multiplied by the municipality’s assessment rate. This calculation then brings us to a taxable value for the property. 

When a PIH Agent determines MARKET VALUE, they use many variables for determining the value: 

  • Outside characteristics like overall condition of the exterior, lot size, curb appeal (how someone buying your home might view it from the curb), etc. 
  • Inside characteristics like: overall condition, whether it is updated or outdated, # of rooms, and homes that are comparable to yours that have recently sold.
  • Current market demand
  • Location

All of the above variables are then used to provide a value in which your home or property would receive a positive reception from potential buyers when introduced to the market. 

What does all this mean in the end? A low assessed value is always nice since it cost you less in taxes annually. A high or over-assessed home is a concern and can be challenged within each municipality. A high market value is what everyone wants, and in a good economic climate, is often obtained. We get asked commonly to provide a market value for owners even if they’re not considering selling but as a good barometer of their investment. Call PIH if you are interested in learning more!