Appraised Value, Market Value & Assessed Value: Understanding The Difference

What makes the numbers surrounding a home value different? It’s all about how the numbers will be used that determines how they are calculated - and understanding how home values are calculated can help you make the right real estate investment.

 

What is Market Value?

The market value of a home, according to Fannie Mae, is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus Implicit in this definition is the consummation of a sale as of a specified date and the passing of the title from seller to buyer under conditions wherby;

1. Buyer and seller are typically motivated
2. Both parties are well informed or well advised, and each are acting in what he or she considers his or her own best interest
3. A reasonable time is allowed for exposure in the open market
4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto
5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale

Key factors that influence market value are:

• Features and condition of the home
• Location
• Job market
• Property taxes & interest rate
• The price other buyers have recently paid for nearby, similar homes
• Latest real estate market trends

A real estate agent can help determine value by putting together a CMA - comparative market analysis which is often used to choose a selling price for a home. However, Realtors are not appraisers and may look at a home and price it below market value to start a bidding war in a sellers market or price it high to leave room for negotiations in a buyers market.

 

What Is Appraised Value?

Appraisal value is determined by a licensed appraiser who has viewed the property, looked at the condition and features and used their extensive knowledge of comparable properties, supported adjustments for differences that exist and the current real estate market.

Appraised value can be market value as defined above but there are several other types of appraised value as well.

Liquidation Value

Liquidation value is a type of value where the seller is under extreme compulsion to sell. This would depends on the reason for the liquidation. For example a seller that has a property that is being foreclosed on in 10 days and needs a sale contract prior to the foreclosure so as not to loose all of the equity in the home.

Disposition Value

Disposition value is similar to liquidation value except that it has the seller under some sort of pressure such as a property that has been foreclosed on and the bank would like to sell the property in under 30 days where the typical sale in the market is averaging 90+ days of exposure.

Both Liquidation and disposition values assume there is some duress on seller and would therefore not likely equal market value.

Retrospective Value

Retrospective value is to determine the value or a property as of a date in the past. Which is often done for estate purposes as of the date of death of an owner, for a divorce proceeding where the court wants a value as of the date of separation etc.

The most common type of appraised value is market value which is typically used by banks and mortgage companies to determine loan amounts.

To learn even more about the different types of appraised value, visit McKissock Learning.

 

What Hurts A Home Appraisal?

When an appraiser views your home, they are looking at square footage, the condition of the home, as well as safety hazards or things that could cause damage to the house. Things that could hurt a home appraisal include:

• Poor curb appeal
• Outdated kitchens and bathrooms
• Outdated systems and appliances
• Glossed over needed repairs

 

What Is Assessed Value?

Assessed value of a home is what the local government uses to determine taxes on a property. It is typically done using mass appraisal techniques utilizing computer valuation models. In Arizona, home values are assessed every year. While the assessed value is not used to determine a home’s selling price, it can be important to pay attention to as your future taxes will depend on the value.

If you think the assessed value of your home is wrong, you can go to the county assessor’s website to see the information recorded and check for any incorrect information, like square footage.

 

Need A Pre-Listing Appraisal In Phoenix, AZ?

We do home appraisals in the Phoenix area including Scottsdale, Chandler, Gilbert, Mesa, San Tan Valley and surrounding areas. We welcome you to look through our website, review appraisal services, join our Facebook community, and learn more about our expert appraisers.

Give us a call to schedule your appraisal.