How is market value different from assessed value?

The distinction between market value and assessed value is fundamental in real estate. Market value refers to the price that a buyer is willing to pay for a property in an open and competitive market, reflecting current economic conditions, demand, and property characteristics. This value can change frequently due to various factors, including housing market trends and buyer preferences.

On the other hand, assessed value is the value assigned to a property by a government authority for taxation purposes. This assessment is typically conducted periodically, which means it might not always correspond to the latest market conditions. The assessed value is used to determine property taxes owed and often does not fluctuate as frequently as market value; it can remain relatively stable based on the valuation schedule set by local governments.

Recognizing that assessed values are essential for tax calculations and may legally differ from the actual selling price of a property helps clarify this distinction. Understanding this difference is crucial for real estate professionals, homeowners, and investors for making informed decisions about buying, selling, and property taxation.