What’s my property’s worth?

from March 2023 Real Estate Guide

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Two ways of figuring value

One of the trickiest parts of dealing with real estate is figuring how much a property is worth. When you’re talking about the value of a home, you might hear two different terms used: assessed value and appraised value. Though they sound similar, they have essential differences that are crucial to understand, whether you’re selling a home or buying one.

Put simply, assessed value is the amount your local government thinks your home is worth; it’s what is used to determine property taxes. Appraised value, though, is the amount a professional home appraiser thinks your home is worth; it’s typically used by lenders when considering a mortgage application. Typically, appraised values are higher than assessed values.

Let’s break down the key differences you need to know:

What is a home’s assessed value?

The assessed value of a home is the amount that the local government believes the home is worth. Think of it in terms of a tax assessment: Typically, the local assessor’s office assigns a value to a property based on factors such as the size and location of the lot, the size and amenities of the home and recent sale prices of similar homes in the area.

Your town or county will charge property taxes based on that assessed value. For example, if your city assesses your home at $550,000 and charges a 2.5 percent property tax, you’ll owe $13,750 in property taxes each year.

Some areas allow for certain exemptions, such as not charging tax on the first $100,000 in assessed value or exempting a portion of the value for owner-occupied homes. If you believe that the government has assessed your home unfairly and is overcharging you, you can appeal your property assessment. Doing so typically involves having an assessor visit your home to re-evaluate it.

What is a home’s appraised value?

A home appraisal is a professional examination by a qualified professional (usually licensed, though that may vary by state) to determine the value of a property. Appraisers also look at things like recently sold homes in the area, a home’s size and number of bedrooms and bathrooms, lot size and, crucially, the home’s condition and apparent level of upkeep.