Lisa Mailhot | December 13, 2024
Buyers
Home prices are dynamic, changing based on a variety of factors, making the real estate market a thrilling (or sometimes frustrating) field. As a buyer or seller, understanding the distinction between tax-assessed value and market value is crucial in leveraging these figures to your advantage.
Market value is defined as the most likely price a property will fetch in a fair, open market transaction. In simpler terms, it's the price a willing buyer pays and a seller accepts. Real estate professionals assess this value by examining:
These factors help real estate agents establish a property's market value, guiding sellers in setting asking prices and aiding buyers in making competitive offers.
Assessed value is primarily used for property tax purposes, calculated by municipal assessors. They consider sales of comparable properties, any income from the property, and costs to replace the home if lost to disasters. This assessed value, minus any applicable tax exemptions, is then multiplied by the assessment ratio (typically 80%-90%) to determine the taxable value.
For example, if a home’s market value is $200,000 and the assessment rate is 80%, the taxable value becomes $160,000, which is used to calculate property taxes.
Though market values can fluctuate dramatically, assessed values tend to change less drastically, with some states capping annual increases. A lower assessed value benefits homeowners by reducing the property tax burden, while a higher market value can improve a home's resale value.
Sellers might highlight a home’s high assessed value to justify their asking price, whereas buyers might reference a lower assessed value to negotiate a lower purchase price. Ultimately, the critical number is the agreed-upon sale price between buyer and seller.
Whether tax-assessed or market value, the true worth of a property is what parties agree upon in a sale. If you're looking to make a move in Orange County and want to navigate these values proficiently, let's connect and find your perfect home or get the best deal on your property.
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