The value of your home is a big part of your overall finances. It represents a large portion of your net worth and how your annual property taxes are calculated. Unfortunately, if you look up the value of your home, you may find varying amounts. This is because your home is valued in different ways for different reasons. You will most likely see a market value and an assessed value, which is a good thing in the world of real estate.
Market value is used by lenders, buyers, and sellers to estimate the correct selling price given current market conditions. Simply put, it is the value that the assessor comes up with before applying the assessment rate. Market value is what a prospective buyer would be willing to spend on a particular home and what the seller of the home would be willing to accept if it were sold today.
A lender will normally hire professional home appraisers to assess the market value for mortgage applicants or homeowners who want to refinance. Homeowners can also hire an appraiser to perform a comparative market analysis. This is useful when you are thinking about selling a home and want to know how much to list the property for.
Market value is determined by a few factors including:
The assessed value of a home is normally used for tax purposes. Homeowners usually want their property values to grow over time, but in the case of assessed value, it is better when the home’s value is lower. This is because the higher the assessed value, the higher your property taxes will be. Depending on where you live, a municipal or tax assessor will evaluate different factors including:
The assessor will either come to your property to inspect it or complete the assessment remotely. The assessor will then take the home’s value and subtract any tax exemptions you qualify for. This number is then multiplied by an “assessment rate” or “assessment ratio,” which is a fixed percentage set by each tax jurisdiction to determine the table value of your property. The assessment rate is normally around 80% to 90%. Tax officials will use this value to calculate your property taxes.
There are many reasons to know and understand your market value:
Whether you are a home buyer or seller, look closely at your home’s market value but also take into consideration the assessed value. The combination of the two values will give you the knowledge to act as an informed consumer and seller and not one that is blindly entering a real estate transaction.
For more information on the market and assessed values, contact our team at HomeHunt today. We can help get you the information and knowledge you need regarding the value of your home.