What Does Assessed Value Mean And How Is It Determined?
Ashley Kilroy3-minute read
February 26, 2022
When you sell your home, you’ll likely have it assessed before putting it on the market. A home's assessed value will determine its property tax bill and influence how much a house will sell for. Regardless of whether you are selling, every homeowner should understand what a home's assessed value is, how it is determined, and the impacts of an assessment. This article will tell you everything you need to know about your home's assessment.
What Is Assessed Value?
The assessed value is a property's determined valuation to calculate the appropriate tax rates. An assessment considers sales of similar homes, as well as home inspection findings, in its final determinations.
When it comes to selling a home, the assessed value is the most widely accepted dollar value of your home. It is the most stable indicator of a home's worth.
Property Tax And Assessed Value
The assessed value is used in determining property taxes. Depending on where you live, a municipal or county tax assessor will determine your home's value, and local tax officials will calculate the property taxes based on the assessed value. The higher your home's assessed value, the higher your property taxes will be.
It’s important to note that the homestead exemption includes property tax exemptions if the homeowner is the owner-occupant. For example, if the owner is the property's resident and holds the property's title, they’ll receive the homestead exemption.
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How To Find The Assessed Value Of A Home
An assessor finds the assessed value of a home based on the market value, the appraised value, or a uniform percentage of the two. Municipalities and counties employ an assessor to determine the assessed value of the homes in their jurisdictions. It’s important to note that while market value and appraised value are essential, an assessor uses a comparative market analysis when finding the assessed value to ensure that they are making a fair and accurate assessment.
Assessed Value Vs. Market Value
There are several differences between market value and assessed value. Market value refers to a home's determined selling price in an open market. Some of the factors considered when determining a property's real estate market value are:
- Curb appeal
- Internal characteristics like square footage, number of rooms, energy efficiency, etc.
- Values of similar homes via a comparative market analysis
- If the market currently favors buyers or sellers
- Location of the property in question
It’s important to note that a homeowner can increase their home's value if they’re looking to sell. For example, by enhancing their curb appeal, they may increase the value of their home.What Is Appraised Value?An appraiser determines the appraised value of a home. The appraised value of a home may differ significantly from a property's market value because it is a valuation of a property given at a specific time. Therefore, if the housing market fluctuates, the appraised value of the home can fluctuate significantly as well.
The assessed value of a home is determined by an assessor and determines how property will be taxed. This differs from an appraised value because the appraised value can change drastically with the market, and it differs from the fair market value because the fair market value can change based on both the market and the appearance of the home.
Getting a mortgage and going through the home buying or selling process can be confusing. Use the Rocket Mortgage® Learning Center to learn more about mortgages, buying or selling a home, and much more.
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