Market Value vs. Appraised Value

Market value versus appraised value -- the differences you need to recognize

If you are trying to sell your home, it is useful to know the difference between the market value and the appraised value of your property. The market value is simply what the majority of potential buyers looking at your home would be willing to pay for it. The appraised value is what the lender thinks your home is worth based on a number of factors.

Market Value

The market value of a home is typically the price it sells for, not the price for which it could sell. Any number of factors could influence the going price or market value of your house, with many of these factors based on buyer and seller motivation and the buyer's feelings about the property. If your home has been kept up, is situated near quality schools in a well-maintained neighborhood and has many of the amenities home buyers are looking for, potential buyers are likely to pay a higher price, raising the market value of the property.

Appraised Value

The appraised value of your home is what the lender thinks it is worth, as determined by a third-party appraiser, and is rarely the same as the market value. The appraised value is usually unbiased in contrast to the market value, and it is based on the sales comparison to similar homes, in similar condition, within your neighborhood in the previous four to six months. An appraiser will do a physical inspection of your home to factor in any major defects or improvements that may affect the appraisal value.


If there is a substantial gap between the market value versus the appraised value of your property, it is useful to obtain a third opinion. When hiring an independent appraiser, records of all upgrades and current market values for the area should be given to the appraiser. It is helpful to prepare your home for the appraiser's visit as you would for a potential buyer.


When a buyer is interested in your home, her lender will base the approved loan and down payment amount on the purchase price or appraised value, whichever one is lower. If the appraised value of your home comes in significantly below the market value, or how much the buyer is willing to pay, the buyer must come up with the agreed-upon down payment amount, plus the difference between the appraisal value and selling price. If the buyer does not have sufficient cash available, the deal will be jeopardized, and you may have to wait for another buyer.

Assessed Value

The market value and appraisal value of your home should not be confused with its assessed value. The assessed value of a property is the taxable value used by tax assessors in determining your property taxes. The assessed value of a home can be much lower than either the market value or the appraised value and is not an indication of the market value. The tax assessor looks at what similar properties are selling for and what it would cost in today's market to replace the home.

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