Understanding Home Values: The Key Differences Between Assessed, Market, and Appraised Value

When it comes to determining the value of your property, understanding the difference between three key concepts—assessed value, market value and appraised value—is essential. While all are important in real estate, they serve distinct purposes and can often lead to confusion among homeowners. In this guide, we’ll break down the differences between them, explain how each affects your property, and why market value is the most accurate reflection of your home’s current worth.

What Is Assessed Value?

The assessed value of a property is used by local governments to calculate property taxes. This value is determined by tax assessors and is based on the property’s value from the previous year. It may be adjusted for significant changes or improvements made to the property but typically fluctuates due to factors such as:

• Voter-approved levies
• Changes in tax rates
• Property improvements

It’s important to understand that the assessed value is not an accurate representation of your home’s market value. Instead, it primarily impacts how much you pay in property taxes. In October, your 6-month taxes are due, and you usually receive a postcard indicating the current assessed value of your property. Many homeowners panic, mistakenly thinking this figure is their home's market value—when in reality, it’s entirely different.

How Washington State Property Taxes Work

In Washington State, property taxes are influenced by levy rates, which adjust based on property value changes. When property values increase, levy rates typically decrease, and vice versa. For instance, in 2022, Sammamish saw a 51.2% increase in median home prices, but property taxes only rose by 24%, thanks to Washington’s budget-based tax system. This system moderates tax increases even when property values soar. You can read more about how Washington State property taxes work [here](insert link).

What Is Market Value?

The market value of your home represents the estimated price it would sell for in today’s real estate market. Unlike assessed value, market value is determined by factors such as:

• Recent sales of comparable properties (“comps”)
• Your home’s condition, features, and finishes
• Location, including proximity to amenities, schools, and transportation

Market value reflects the actual worth of your property based on what buyers are willing to pay in the current market. This makes it a much more accurate measure of your home’s true value than the assessed value.

What Is Appraised Value?

The appraised value is an estimate of a property's current market value, determined by a licensed appraiser. This value is based on factors such as the property's location, size, condition, and recent sales of comparable properties in the area. Lenders typically require an appraisal to ensure that the property's value supports the loan amount requested by a buyer. The appraised value is important in real estate transactions as it helps determine the price at which a home can be bought, sold, or refinanced.

Clearing Up the Confusion

When it comes to understanding property value, it’s important to distinguish between assessed, market, and appraised values, as each serves a distinct purpose in real estate. Homeowners often find these terms confusing, but by breaking them down, you can see how they impact your property in different ways.

• The assessed value of a property is used by local governments to calculate property taxes.
• The appraised value is an estimate of a property's current market value, determined by a licensed appraiser.
• The market value of your home represents the estimated price it would sell for in today’s real estate market.

Why Market Value Matters for Homeowners

Whether you’re buying, selling, or investing in real estate, knowing your home’s market value is essential. Here’s why:

• For buyers: Market value helps ensure you’re not overpaying for a property.
• For sellers: Pricing your home according to its market value attracts serious buyers and helps you maximize your sale price.
• For investors: Understanding market value helps assess the potential return on investment.

At the end of the day, market value offers a realistic picture of your home’s worth and plays a crucial role in real estate transactions.

How I Can Help Determine Your Home’s Market Value

Determining market value requires in-depth knowledge of the local real estate market, including current trends, recent sales, and your home’s unique features. As a seasoned real estate broker, I specialize in:

• Conducting comprehensive market analysis based on local sales data
• Providing transparent insights into how I determine your home’s market value
• Offering expert guidance to ensure your home is priced competitively for the best possible outcome

When you work with me, you’ll have peace of mind knowing your home is accurately valued and positioned to sell for the highest price possible.