What is your Home Value? Assessed, Appraised or Market?
Home value, what is it? When buying or selling a house, you’ll quickly learn that a home value means different things to different people. It can be confusing and frustrating if you don’t know what those values mean. Luckily, we can offer some clarity.
Is your home value the same as market value?
A home’s market value is the price a buyer is willing to pay and the price a seller is willing to accept. This is the price that a real estate agent figures out by examining a variety of factors. These include a home’s condition, location, supply and demand of the market, and how it compares with other homes.
Even if a seller is working with a reputable agent, buyers should have their own agent examine the market and determine if the asking price is a reasonable home value. Then they can make an informed offer that (hopefully) makes everyone happy.
Is your home value the same as assessed value?
Municipalities generally only use a home’s assessed value for property tax purposes. An assessor will examine a property and compare it with similar properties.
Using that information, the assessor comes up with your home value figure. Then that number is multiplied by an “assessment rate,” which is usually 80 percent to 90 percent of your home’s current market value.
What does that mean in real numbers? It means that if the assessor says a home is valued at $300,000 and the assessment rate is 90 percent, then the home’s assessed value will be $270,000. The municipality then uses that number to determine property taxes.
The assessed value doesn’t always come anywhere close to what a home’s market value may be. Current market conditions and the amount of time it’s been since an assessment can cause quite the discrepancy.
However, it is important to know what to expect for property taxes. To search nationwide for property tax information, you can go to publicrecords.netronline.com.
Is your home value the same as appraised value?
A lending institution uses the appraised value of a home to ensure it’s making a good investment.
An appraiser will look at comparable sales in the neighborhood and conduct a physical examination of the home to figure out its appraised value. Then the bank will use that home value to determine how much it’s willing to lend for a property.
Ideally, this number is the same or higher than what the buyers offered. If it is lower, then the buyers and sellers will need to renegotiate or the buyers will have to make up the difference with cash.
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