Assessed Value, Appraised Value, Market Value - What's the Scoop?

Just what is the difference between appraised value, assessed value, and market value? Does it matter if a home is "listed below appraised value"? Are the terms interchangeable? No. Each is very different so it's important to understand the differences between them. 

Assessed Value 

Each city and town performs its own assessments in order to determine what homeowners will pay in property taxes. Municipalities send out tax assessors to go around the city or town and assign values to existing homes. They use a number of different variables, such as sales comparison data and cost methods to determine what a given property is worth. In most cases, the assessors don't go inside the house to see how many rooms there are, what installations are in place or observe other physical aspects of the home that add or detract from its value. They rely on public data from when the house was built or when building permits were pulled or when it last sold. Because of this, assessments may not adequately and correctly reflect a property's true value. There is also no specific rule or law that says how often assessments must occur.  That is determined by the local tax assessor's office.

Appraised Value

An appraisal is a much more thorough evaluation. Lenders typically require a professional appraisal to be done on a property during a purchase or a refinance transaction. This helps determine fair market value and to assure that the amount of loan to value is adequate. While an assessor only takes into consideration external factors like those mentioned above, a professional appraiser considers many unique aspects of a residence such as architectural style, insulation type and amount, foundation type, location, age of home, upgrades and updates, and more.

Market Value

This is the value the current market will bear - based on the price a buyer is willing to pay and a seller is willing to accept. Market value is greatly impacted by economic conditions, the amount of housing inventory available, updates and upgrades buyers expect or that are consistent in a specific area, and other factors that may be of either local, regional or national concern.