Assessed Value, Appraised Value, and Market Value: What Each One Means

Three Numbers, One Property

If you've ever bought, sold, or received a property tax bill, you've probably encountered three different figures describing what your home is worth — and they rarely match. That's not an error. Each figure — assessed value, appraised value, and market value — is calculated for a specific purpose by a specific party. Confusing them can lead to real misunderstandings, whether you're disputing a tax bill, applying for a mortgage, or negotiating a sale price.

This reference explains what each value measures, who determines it, and when it actually matters to you as a homeowner or buyer.

Assessed Value: The Tax Authority's Figure

Assessed value is the dollar figure your local government assigns to your property for the purpose of calculating property taxes. It is set by a government assessor — not a private appraiser — and is typically updated on a periodic schedule that varies by jurisdiction.

Assessed value is almost never equal to what a home would sell for on the open market. Many counties apply an assessment ratio — a percentage of the estimated market value — to arrive at the assessed figure. For example, a jurisdiction with an 80% assessment ratio would assign an assessed value of $320,000 to a home estimated at $400,000.

Homeowners who believe their assessed value is inaccurate generally have the right to appeal through a formal review process. Learn how assessed value connects to your tax bill and what options exist if you disagree with the number.

Appraised Value: The Lender's Reference Point

Appraised value is an opinion of value produced by a licensed or certified real estate appraiser following a structured inspection and analysis process. It is most commonly required by mortgage lenders, who need an independent confirmation that a property is worth at least as much as the loan amount before financing is approved.

Appraisers examine the physical condition of the home, its features and square footage, and recent sales of comparable nearby properties — often called comps. They apply recognized methodologies, such as the sales comparison approach or the cost approach, to reach a defensible, documented value conclusion. See how the full appraisal process unfolds, from the initial inspection to the final report.

Appraised value is a point-in-time professional judgment. It can differ from market value — sometimes significantly — because it reflects specific methodologies and data constraints rather than live buyer sentiment. Understand where appraised and market value diverge and why both figures matter in a transaction.

Market Value: What Buyers Will Actually Pay

Market value is what a willing, informed buyer would pay a willing, informed seller in an arm's-length transaction — with neither party under pressure to act. It is not set by any single authority; it emerges from actual market conditions, buyer competition, seasonal demand, interest rate environments, and comparable recent sales in the area.

Market value is the number most relevant when you're listing or purchasing a home. A seller's asking price is an opinion; the final sale price — after negotiation — is the closest real-world expression of market value at that moment. Online valuation tools attempt to estimate market value algorithmically, but they carry meaningful limitations. Explore why online estimates and professional appraisals often disagree.

Market value is also the most dynamic of the three figures — it can shift week to week based on inventory levels, buyer demand, and broader economic conditions. Discover why two similar homes on the same street can carry very different market values.

How to Use Each Value

Knowing which figure applies in a given situation prevents costly confusion:

• Assessed value is relevant when reviewing your property tax bill or filing an appeal with your local assessor's office.
• Appraised value matters most during mortgage underwriting — if a home appraises below the agreed sale price, lenders will typically limit financing to the appraised figure.
• Market value is the primary consideration when pricing a home to sell or evaluating whether a listing price is reasonable before making an offer.

For a broader view of how all valuation methods fit together, explore a complete overview of home valuation from start to finish.

This article is for general informational purposes only and does not constitute financial, legal, or tax advice. Consult a licensed real estate professional, appraiser, or tax adviser for guidance specific to your situation.