When it comes to real estate, there are many terms that can be confusing, especially for those who are new to buying or selling homes. Two of the most common terms that people often mix up are "assessed value" and "appraised value." While they may sound similar, they are actually two very different things. In this blog post, I will explain the difference between assessed value and appraised value in real estate.

What is Assessed Value?

Assessed value is the value of a property that is determined by the local government for tax purposes. This value is used to calculate the property taxes owed by the owner. The assessed value is typically calculated annually, and it is usually based on the local government's assessment of the property's physical condition, location, and other factors. For example, if the local government determines that the property is located in a desirable area or has upgrades like a new, gourmet kitchen or finished basement, the assessed value may be higher than a property that does not.

Assessed value is an important number for property owners, as it determines how much they will pay in property taxes. It's worth noting, however, that in the Greater Newburyport and Southern New Hampshire real estate markets, the assessed value is usually not the same as the market value of the property. This is because the assessed value is focused on taxation, while the market value is focused on what a property would sell for. In the Greater Newburyport and Southern NH markets, the sale price is 99% of the time higher than the assessed value.

What is Appraised Value?

Appraised value, on the other hand, is the estimated fair market value of a property as determined by a licensed appraiser. The appraised value is typically used by lenders to determine how much they are willing to lend on a property or by buyers and sellers to determine the fair price to pay or ask for a property. An appraiser will consider factors such as the property's location, size, condition, comparable properties, and recent sales of similar properties in the area.

Appraised value is important because it helps to ensure that a property is priced fairly. If a buyer is considering purchasing a property for a certain amount, an appraisal can help confirm whether that price is reasonable. Likewise, if a seller is trying to sell a property, an appraisal can help them determine the appropriate asking price.

Appraisals can be very valuable, and I sometimes recommend them to clients who may have a very unique property to sell or to clients who need a fair market value for the court in cases of divorce or an estate sale.

What are the Key Differences Between Assessed Vallue and Appraised Value?

In summary, the main difference between assessed value and appraised value is that the assessed value is determined by the local government for tax purposes, while the appraised value is determined by a licensed appraiser to estimate the property's fair market value. Assessed value is primarily used for taxation purposes, while appraised value is used for buying, selling, and lending decisions.

It's important to note that the assessed value and appraised value can sometimes be similar, but they are not always the same. This is because they are calculated using different methods and for different purposes. As a property owner or buyer, it's important to understand both values to make informed decisions regarding taxes, financing, and pricing.

Buying and selling real estate can be a confusing and stressful process, but it doesn’t have to be! As a full-time Realtor in Greater Newburyport and Seacoast NH, I’m here to help! Contact me Contact me to learn more the home buying or home selling process.