Buyers across the country have more than needed information about a particular home. Buyers are far more savvy than few years ago about their house hunting. As a Realtor we do want purchaser to be as educated about their purchase as possible especially the value of the home that they want to purchase at.
There are numerous terminologies that buyers will hear during the process of purchasing a home. Here are the 3 most confusing yet most important terminology in the industry:
Tax Assessed Value of the Property - This is nothing but what your local county things the value of your home is. It has nothing to do with the market value or what a buyer and seller are willing to sell your home at. The tax assessment is typically done once a year. Depending on the local economy it may be adjusted accordingly. Some purchaser or Realtor may use to co-relate the sales price to tax assessment but in most cases it is an independent value.
Market Value of the Property - This is what the Realtor, seller or buyers think your home is worth in a given real estate market place. Say majority of the homes in your neighborhood are selling for about $450K however you have an addition or other fine updates you can adjust the value to place yourself in the market place when listing your home. Another example would be there are 5 similar homes on the market in your neighborhood. The list price will determine how you stand apart from your competitors.
Appraised Value of the Property - Buyer may want to offer $X, Seller agrees to accept $X however appraisal is a subjective opinion of the appraiser who will determine what the value of the home is based on the recent comps, adjust any updates or any other repairs needed in the house. The lender will determine your loan value based on this value. In a real estate transaction appraiser places a major role. A lower appraiser means seller has to reduce the price or buyer has to come up with a difference or they agree to meet in the middle ground and/or worst case the contract gets voided and everyone is back in the market place.
In some unique home layout or neighborhoods sellers may hire an independent appraiser for the property value. However the lender will still require to employ service of their own independent appraiser.