Appraisal vs Market Value vs Assessed Value

Appraised value, market value, and assessed value describe the same house but almost never match — because three different parties calculate them, for three different reasons, using three different methods, at three different points in time. Market value is what a buyer would actually pay today. Appraised value is a licensed appraiser's formal opinion of that price, usually ordered by your lender. Assessed value is the figure your county uses to calculate property tax, and it often trails the market by design. Treating the three as interchangeable is one of the most common and costly misreadings in a home sale.

The three values at a glance

Because the inputs and rules differ, it is normal for all three to disagree — sometimes by a wide margin. Here is what each one actually means.

Market value: what a buyer would actually pay

Market value is the price a willing, informed buyer and a willing, informed seller would agree to in an open, competitive market, with neither under pressure. It is fundamentally an opinion until a sale closes — at which point the agreed price becomes the clearest evidence of market value for that home on that day.

Real-estate agents estimate it with a comparative market analysis (CMA): recent sales of similar nearby homes ("comps"), adjusted for differences in size, condition, lot, and features, and shaded by current demand, inventory, and interest rates. Because it tracks live conditions, market value can move month to month. Automated "estimates" from listing portals are a rough starting point, not an appraisal, and can be off substantially for unusual homes or in thin markets.

If you want a defensible number before listing or making an offer, a local agent can prepare a CMA for your specific block. Home Stimulus's agent matching can connect you with one if you don't already have an agent.

Appraised value: a licensed opinion for the lender

An appraisal is a professional, independent opinion of value produced by a state-licensed or certified appraiser. On a purchase with a mortgage, the lender — not the buyer or seller — orders it to confirm the home is worth enough to secure the loan. Appraisers work to the Uniform Standards of Professional Appraisal Practice (USPAP), maintained by The Appraisal Foundation, which sets the ethics and methodology the report must follow.

Appraisers typically weigh up to three approaches: the sales-comparison approach (most common for houses), the cost approach (land value plus the cost to rebuild, minus depreciation), and the income approach (used mainly for rental property). The result is a point-in-time opinion tied to a specific purpose. That is why an appraisal for a purchase, a refinance, an estate, or a divorce can differ for the very same house — the effective date and intended use are not the same.

An appraisal aims at market value but does not guarantee it. When an appraisal comes in below the agreed price, that gap (an "appraisal gap") can affect how much the lender is willing to finance, because most lenders base the loan on the lower of the price or the appraised value.

Assessed value: the number your tax bill uses

Assessed value is set by your local (usually county) tax assessor to calculate property taxes. This is where the largest differences appear, for three reasons that vary heavily by jurisdiction:

• Mass appraisal. Assessors value thousands of parcels at once using statistical models rather than an individual walk-through of your home, so the figure is far less granular than an appraisal.
• Assessment ratios. Many jurisdictions tax only a percentage of estimated value rather than the full amount, so a low assessed value does not by itself mean low taxes — the tax rate is applied to that assessed base.
• Caps, exemptions, and reassessment timing. Some states limit how much the taxable value can rise each year, or hold it until the property changes hands; homestead, senior, veteran, and other exemptions reduce it further. Reassessment may happen annually or only every few years, so assessed values routinely lag the market.

Because of these rules, your assessed value can sit well below — or occasionally above — what your home would actually sell for. Ratios, caps, and exemptions differ by state and county, so always check your own county assessor's website for the specifics that apply to your parcel.

Why the three rarely line up

• Different purposes: pricing a sale, backing a loan, and levying a tax.
• Different methods: a market CMA, a USPAP appraisal, and mass appraisal.
• Different timing: market value is "today," an appraisal reflects a fixed effective date, and an assessment may be months or years old.
• Different rules: only the assessed value is shaped by tax caps, ratios, and exemptions.

None of these being equal is a sign that something is wrong; it is how the system is designed.

What to do when they conflict

If your appraisal comes in low

Review the report for factual errors — wrong square footage, missed renovations, weak comparable sales — and ask your lender about a reconsideration of value, supported by additional comps. Buyer and seller can also renegotiate the price or terms. An appraiser's opinion is not infallible, but it does carry weight with the lender.

If your assessed value looks too high

You generally cannot lower it by pointing to the tax bill alone; most jurisdictions have a formal appeal process with firm deadlines. Evidence usually includes recent comparable sales or a private appraisal. Start at your county assessor's site to confirm the appeal window and required forms — missing the deadline typically means waiting a full cycle.

Don't price a sale off the tax assessment

Because assessed values lag the market and follow tax rules, they are a weak guide to what a buyer will pay. Use current comps or an appraisal for pricing, and treat the assessment as a tax figure, not a market figure.

A note on professional review

Assessment ratios, caps, exemptions, reassessment schedules, and appeal procedures are highly state- and county-specific, and appraisal requirements differ by loan type. The specifics above are marked for verification and are general education, not legal, tax, or valuation advice. Confirm the numbers and deadlines that apply to your property with a licensed appraiser, your county assessor, or a qualified tax professional before you act.