Your home has three different values, and each has a different purpose.
What is the difference between a home’s assessed value, fair market value, and appraised value? Today I’ll explain what these terms mean.
Property taxes used to pay for local government services like schools, parks, and roads come from a home’s assessed value. The value that the local county assessor gives your home is usually based on its purchase price, though it can change over time due to Proposition 13 here in California. There are steps you can take to get the lowest possible assessed value. One way is to file for a homestead exemption, which will lower the tax bill for your principal residence.
By contrast, a home’s fair market value is what a buyer is willing to pay for it. That value can differ from home to home and market to market based on conditions like supply and demand. In theory, the home’s assessed value should be the same as its fair market value at the time of the sale. However, fair market values will likely increase quicker than assessed values in a hot market like this.
The appraised value is how an appraiser would value the house for the buyer’s bank or mortgage holder since the mortgage a buyer gets is based on the appraised value.
Even though doing so can be tricky, we always try to ensure that buyers can purchase a property at a fair price and that sellers receive a fair price in return. I’d be happy to explain this in more detail, so don’t hesitate to give me a call or send me an email. I’ll gladly answer any questions you have.