When you are buying or selling a home, it’s important to understand the difference between the market value and the assessed value. For buyers, this is particularly important when trying to determine what the property taxes on your new home may be. For a helpful video on determining the property taxes on a home you may be purchasing, click here. Although the market and assessed values may seem similar for a home, they may vary. Furthermore, these values are used in distinct ways. Having a good understanding of both market and assessed values will be a huge asset when either buying or selling a home.
What is market value?
Simply put, a property’s market value is whatever a buyer is willing to pay for it in its current condition. When estimating a property’s current market value prior to listing it for sale, your real estate agent should be able to conduct a comparative market analysis (CMA) in order to determine a likely listing price range for the property. This CMA will take into account recently closed sales in your area for properties that are a similar size and have similar features. Of course, many factors will help determine a property’s market value such as its location, lot size, interior and exterior aspects, overall condition of the home, and other aspects. When determining a property’s market value, many homeowners make the mistake of relying solely on various online evaluation tools such as a Zestimate™ or other evaluation methods. This can be misleading as these online value estimators can have a wide range of inaccuracies.
What is assessed value?
The assessed value is the value that a government assessor assigns to a home for tax purposes. In general, market value is higher than assessed value. This is because assessed value is typically set at a percentage of market value, and the percentage is often lower than 100%. The exact percentage varies from state to state and even from county to county. As a result, the higher a property’s assessed value is, the higher the property taxes will be. When buying a home, buyers may consider hiring their own independent assessors to obtain a value. Although this independent finding will not impact the tax rate, it could be helpful with negotiating a purchase price.
In closing, it is important for both buyers and sellers to understand the differences between a market value and an assessed value. When buying and selling real estate, both buyers and sellers will focus more on the market value since this is what the property will likely end up selling for. With this said, it is also important for buyers to have a good understanding of the likely assessed value of the the property that they are purchasing as this will certainly impact their budget estimations.
If you are thinking about selling your home or buying your dream home in the South Florida area, we can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download our free Florida Home Search app for your smartphone or tablet.