Often friends and clients will ask me “Hey, what do you think my house is worth?”   What they really want to know is “how much could I sell my house for?”  Did you know your home actually has several different values?  It does.  There’s the Assessed Value, the Appraised Value, the Insured Value and the Market Value.

Let’s start with the Assessed Value.  This is the value your city or locality ‘assigns’ the property for the purposes of taxation and generating revenue.  While I’m not an assessor, I can tell you a few things:

  • The assessment does not take into account your new granite counters.  The assessor doesn’t know if you’ve refinished your hardwood floors, tiled your shower or just got new stainless steel appliances.  They will. however, take into account if you’ve added any bedrooms, bathrooms or a new deck.  Focuses less on the specific.
  • The assessment doesn’t change as rapidly as the other values.  Most localities reassess every 2 years, although at the time of a reassessment, a property’s value could remain the same.
  • The locality in which you live is not going to buy your home.  Remember this for later.
  • Bottom Line: Assessed Value is tied to a locality’s revenue and need for or lack thereof.


Okay, what about Appraised Value?  This number is based on an appraisal, which is done when a buyer is looking to finance a purchase, or a home owner is refinancing the home they own.  There is both art and science to arriving at an Assessed Value – consider the following:

  • An appraisal is based only on recently sold properties (past 6 months), preferably ones that are close in age, size and proximity to the ‘subject’ property.
  • An appraiser will look closely at the ‘subject’ home, taking note of the features and amenities, and then make ‘adjustments’ for the differences between that home and the comparable sales.  This one gets much more specific.
  • Appraised Values are tied to the recent sales in an area, so they can change often based on which homes have sold and for how much.
  • Bottom Line: the Appraised Value is going to determine how much a bank will lend you to buy that new home (or how much they will give you to refinance the home you’re in).


The Insured Value is what an insurance company will tell you its going to take to replace your home if it experiences some type of catastrophic damage.  For example, if you live in a 75 year old cape cod, the assessment and appraised value have no bearing on what it would cost to rebuild the home if it burned to the ground.

Finally, what about Market Value?  You might think your real estate agent determines this number, or that maybe you as the home owner get to decide it.  Actually, the buying public will ultimately decide the Market Value, because it is what a ‘ready, willing and able buyer’ is willing to pay for a home on the open market.

A couple notes:  a ready, willing and able buyer.  So not what someone says they could pay you in a year or two – that’s not ready.  Not what your uncle says he would pay you if he could, but he can’t.  That’s not able.  And willing is pretty self explanatory.

On the open market:  If one guy sells his home to another guy without telling anyone else its for sale, how does either one of them know they got a fair deal?  Maybe the guy selling it could have gotten more.  Maybe the guy buying it could have bought it for less.  When a home is exposed to the open market of buyers, those buyers collectively will determine how much the house is worth.  Either they will buy it for the listed price, or the seller will reduce until they do.

Note that each of these values is relatively independent of the others.  The assessor isn’t buying your home, so he’s not concerned with what a buyer will pay for it.  The appraiser doesn’t think about what happens if your home is destroyed, so he’s not concerned with insuring it.  And buyers shouldn’t focus on the assessed value, because its purpose is for revenue, not what the market is willing to pay.

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.