What is the Difference Between Assessed Value and Market Value?

The main difference between assessed value and market value lies in their purpose and determination. Here are the key differences:

1. Purpose:

• Assessed value is used for tax assessment purposes, providing local governments with a basis for calculating property taxes.
• Market value is used in real estate transactions, such as buying or selling a property, and reflects the price a buyer and seller would agree upon in an open and competitive real estate market.

1. Determination:

• Assessed value is determined by local tax assessors based on factors like location, size, condition, and other relevant criteria set by the government.
• Market value is determined by real estate professionals, appraisers, or through comparative market analysis, considering factors such as recent sales of comparable properties, property condition, and current market conditions.

Assessed value is typically lower than market value because it does not take into account current market conditions and is based on a set of guidelines that determine the value of the property. In some counties, the assessed value is calculated as a percentage of the market value. As a result, the assessed value might not always reflect the true market value of a property.

Comparative Table: Assessed Value vs Market Value

The difference between assessed value and market value lies in their purposes, determination methods, and frequency of updates. Here's a table highlighting the key differences:

In most cases, assessed value ranges from 80% to 90% of the market value, but it can be higher or lower depending on factors that may impact the assessment rate set by the local jurisdiction.