Difference Between Assessed and Market Value
When it comes to buying or selling a property, two important terms that are often used are assessed value and market value. While they may sound similar, there are significant differences between the two. Understanding these differences is essential for anyone looking to buy or sell a property.
Assessed value is the value assigned to a property by the local government for the purpose of calculating property taxes. The assessment is typically based on a combination of factors, including the size and condition of the property, as well as the local real estate market. The assessed value is used to determine the property taxes that the owner must pay each year.
On the other hand, market value is the value of a property as determined by the market. It is the price that a buyer is willing to pay for the property and the price that a seller is willing to accept. Market value is influenced by a variety of factors, including location, condition of the property, current market trends, and competition from other properties for sale.
One of the primary differences between assessed value and market value is that assessed value is typically lower than market value. This is because assessed value is used for tax purposes and is often based on a formula that does not take into account the current market conditions. As a result, assessed value may not accurately reflect the true value of a property.
Market value, on the other hand, is the true value of a property as determined by buyers and sellers in the current market. It takes into account all of the relevant factors that influence the value of a property, including the condition of the property, location, and current market trends. Because market value is based on actual market conditions, it is typically higher than assessed value.
Another difference between assessed value and market value is the frequency with which they are calculated. Assessed value is typically calculated annually, while market value can change from day to day based on changes in the market. This means that the assessed value of a property may not accurately reflect the current market value of the property.
In short and easier to understand terms assessed value is used for tax purposes and is typically lower than market value. Market value is the true value of a property as determined by buyers and sellers in the current market and is typically higher than assessed value.