Assessed Value vs. Fair Market Value: What’s the Difference?

While both assessed value and market value provide some insight as to how much your home is worth (and what you might be able to sell it for), there are some key differences between the two.

Here’s what you need to know:

Assessed Value

What is Assessed Value? 

Your municipality typically determines your home’s assessed value as a means of calculating your property taxes.

In Edmonton, for example, assessed value and taxes are re-calculated every year (as of July 1st) in what’s known as a “mass appraisal.” This is based on information collected from MLS® listings, inspections, permits, aerial images and sales-related data on your home (from the last three to five years).

Specific data taken into consideration includes:  

• Home Style (Single-family, townhome, apartment etc.)
• Square Footage and Lot Dimensions
• Features (number of beds and baths etc.)
• Neighbourhood (crime rates, schools, shops, services and other amenities)
• Year Constructed
• Condition
• Upgrades / Improvements
• Materials Used / Quality of Construction
• Garage
• Etc.

Once the assessed value has been finalized, the city then multiplies this number with their residential property tax rate to establish what you’ll pay in property tax for the year.

Market Value

What is Market Value? 

Compared to assessed value, market value is much more specific. In short, your home’s value is determined not by what the city says its worth, but by what home buyers would be willing to pay for your property within a three-month (30 to 90-day) period. 

Generally determined by a qualified REALTOR®® during a home market evaluation, your home's (market) value will be calculated according to the following factors:

• General market conditions (i.e. buyer’s vs. seller’s market)
• Home Style (Single-family, townhome, apartment etc.)
• Square Footage
• Location (crime rates, schools, shops, services and other amenities)
• External Features (curb appeal, lot size, exterior condition of the home)
• Internal Features (number of beds, baths, finished basement, energy efficiency etc.)
• Year Constructed
• Condition
• Upgrades / Improvements
• Materials Used / Quality of Construction
• Garage
• Comparable Homes in Your Area (what similar homes have sold for)
• Etc.  

In Summary 

Why are my assessed and market values so different? 

Understanding your home’s market value is particularly important if you plan to sell quickly and for a great price. This is because market value is based on current conditions, as well as specific home attributes not necessarily reflected in your property assessment.

Assessed value, on the other hand, can be considered your home’s “tax value” and is based on the data and conditions of the year prior (vs. the 30-90-day window that defines market value). This means your home could be worth potentially thousands more (or less) once a market evaluation has been performed.

Sources: The Edmonton Journal 

Find out how much your home is worth with the help of our FREE HOME EVALUATION! Fill out the form, and we’ll give you an accurate estimate of your home’s value and suggested selling price! 

Related Posts:

• Selling: How is Your Home’s Value Determined
• How to Sell Your Home Fast (and For More Money)
• How to Get the Most Out of Your Home (With the Least Amount of Expense)

Photo credits: freepik.com