Assessed Value vs Market Value
Market value and assessed value are two methods of valuing properties. Individuals need to understand the value of their properties for a number of reasons, which include the payment of property taxes, disposal of the property, purchase of new property, or for other important financial decisions. The article offers a comprehensive explanation of the terms assessed value and market value, how each is determined, and highlights the similarities and differences between assessed and market value.
What is Market Value?
Market value is the price that the asset could be bought or sold for in an open market. It is the price that is fairly agreed on between a well-informed buyer and a well-informed seller in normal circumstances. It, however, does not mean that the market value is the same price for which the asset was bought since the price would have fluctuated with market conditions and may be worth more than or less than the purchased price. The market value of an asset is determined by the supply and demand of that asset in the market. The market value of any asset is usually determined by professional appraisers who take into consideration a number of important factors in deciding the market value. However, it must be noted that assets sold in different parts of the country may have varying market values, and the value of the asset depends largely on its location.
What is Assessed Value?
The assessed value is the value of an asset that has been determined by an expert such as a professional tax assessor for the purpose of property taxation calculations. Real estate taxes that are collected from property owners are calculated on assessed value of the property. The assessed value may not be the same as the asset’s market value; however, the assessor may take the market value into consideration when arriving at the assessed value of the asset. There are a number of other factors that are considered when arriving at the assessed value. These include location of the property, condition of the property, access to utilities, new developments in the area, etc.
Market Value vs Assessed Value
Market value is the value that an asset can be bought and sold for in a market place. The demand and supply determine the market value of an asset. On the other hand, the assessed value is a value that is determined by a professional tax assessor. The main difference between the two lies in the purpose for which each value is determined. The market value is determined for the purpose of purchasing or selling off the asset. The assessed value is determined for the purpose of calculating the real estate tax on the property. In addition to this, an assessed value may give a more long term overview of the property’s value as similar houses sold in the market over the past 6 months to a year are generally assessed when determining the assessed value. The market value is a more up to date value of the property during that particular period, and may fluctuate depending on various market conditions.
What is the difference between Assessed Value and Market Value?
• There are many methods to value the properties; the market value and assessed value are two of such methods.
• Market value is the price that the asset could be bought or sold for in an open market. It is the price that is fairly agreed on between a well-informed buyer and a well-informed seller in normal circumstances.
• The assessed value is the value of an asset that has been determined by an expert such as a professional tax assessor for the purpose of property taxation calculations.