Market Value vs. Assessed Value vs. Appraised Value
Market value asks:
What might an informed buyer pay under current market conditions?
Appraised value asks:
What value does a professional appraisal support for a specific assignment and effective date?
Assessed value asks:
What value does the local assessment system use when determining property taxes?
Why one home can have multiple values
People often talk about a home's value as though the property has one permanent, discoverable number. In practice, every credible valuation has a context.
A buyer may evaluate a home against current listings and recent sales. A lender may obtain an appraisal for a mortgage decision. A local assessor may apply the jurisdiction's valuation date, assessment cycle, classification rules, exemptions, caps, or other requirements. Those processes may examine some of the same facts without producing the same number.
Before using any home-value number, identify who created it, why it was created, when it applies, and how it will be used.
For the broader set of value concepts — including online estimates, replacement cost, and investment value — see Home Value Explained.
What is market value?
In everyday residential real estate, market value generally refers to the price a property is likely to command in an open, competitive market under specified conditions. The exact definition can vary by assignment or legal context, so a formal report should state the definition it uses.
Market value is influenced by current evidence such as:
Who determines market value?
No single person permanently sets it. Agents, appraisers, analysts, and automated models may estimate market value. Sellers choose asking prices. Buyers make offers. The final sale price records what particular parties agreed to in a particular transaction — but even that price is not automatically proof of market value under every definition. Unusual motivation, limited exposure, concessions, related parties, or other transaction conditions can matter.
Why market value changes
Market value can change without a new appraisal or assessment. New sales occur, inventory rises or falls, financing conditions shift, property condition changes, or buyer preferences move. That makes market value time-sensitive: a well-supported estimate from six months ago may no longer describe today's market.
What is appraised value?
Appraised value is a value conclusion developed by an appraiser for a defined assignment. In a home purchase or refinance, a lender commonly orders or obtains an appraisal or another permitted valuation to help evaluate the property offered as collateral.
An appraisal assignment identifies matters such as:
What an appraisal does — and does not do
For mortgage lending, the appraisal helps the lender assess collateral risk. It does not:
Important distinction: An appraisal may estimate market value. "Appraised value" describes the conclusion of an appraisal assignment; it is not necessarily a separate universal definition of value.
What is assessed value?
Assessed value is a value produced within a state or local property-assessment system. It is used, directly or after statutory adjustments, to help determine property taxes. The responsible office may be called an assessor, property appraiser, appraisal district, revenue office, or another local name. Its procedures come from state and local law — not one national formula.
Depending on the jurisdiction, the tax system may involve:
Assessed value and the tax bill
Assessed value is an input into property taxation, but it is not always the final taxable amount and it is not the tax rate. That is why:
Market value vs. appraised value vs. assessed value
This table provides the working mental model. Local rules and specific appraisal assignments can add detail. The goal is not to memorize three definitions — it is to match each number to the decision it was designed to support.
| Market value | Appraised value | Assessed value | |
|---|---|---|---|
| Core question | What might the market pay? | What value does this appraisal assignment support? | What value applies within the local assessment system? |
| Primary purpose | Buying, selling, pricing, and market analysis | Lending or another defined valuation need | Property-tax administration |
| Who develops it | Market participants; professionals and models may estimate it | An appraiser performing a defined assignment | A state or local assessing authority |
| Typical evidence | Comparable sales, listings, supply, demand, property features, transaction conditions | Assignment-specific analysis of market and property evidence | Jurisdictional data, mass-appraisal models, and statutory rules |
| Date | Current or stated market date | A stated effective date | The jurisdiction's applicable valuation date or cycle |
| How often it changes | As market and property conditions change | When a new appraisal with a new date, scope, or evidence is completed | According to local reassessment and tax rules |
| Main caution | An estimate or asking price is not a guaranteed sale price | The conclusion is assignment-specific, not permanent | It may not equal current market value or taxable value |
Why the three values can differ
They use different dates
A current market estimate might use this month's evidence. A mortgage appraisal may have an earlier effective date. A tax assessment may use a valuation date set by law or information from an earlier assessment cycle. When a market changes quickly, timing alone can create a substantial gap.
They serve different purposes
A buyer is deciding what to offer. A lender is evaluating collateral for a loan. An assessor is administering a tax system across many properties under local law. The same number is not required to serve all three decisions.
They may use different methods and data
A buyer may give extra weight to current competition or personal preferences. An appraiser follows the scope and standards of a particular assignment. An assessor may use mass-appraisal techniques and jurisdiction-wide data. One process may also have more current or accurate property information than another.
The transaction itself may be unusual
A bidding war, seller urgency, family transaction, substantial concessions, or limited market exposure can cause a contract price to differ from a market-value opinion.
Tax rules can separate assessed, taxable, and market-related values
Assessment ratios, caps, exemptions, classifications, and phase-ins can create deliberate differences. A public-record number should not be interpreted without its local definition.
A difference is a prompt to investigate — not automatic proof of an error. Compare the purpose, effective date, property facts, evidence, and applicable rules first.
Which value matters most?
The right answer depends on the decision. Match the value type to what you are actually trying to accomplish.
| Your decision | Start with | Also review |
|---|---|---|
| Buying or making an offer | Current market evidence | Contract terms, disclosures, inspection findings, ownership costs, and financing |
| Setting a listing strategy | Current market evidence | Competing inventory, likely buyer pool, condition, and selling costs |
| Getting a mortgage or refinancing | The lender's appraisal or other accepted valuation | Loan-to-value requirements, report accuracy, and lender procedures |
| Reviewing property taxes | Assessment and taxable-value records | Valuation date, exemptions, rates, deadlines, and appeal rules |
| Insuring the structure | Replacement-cost analysis | Policy terms, limits, deductibles, exclusions, and insurer requirements |
| Evaluating an investment | Market evidence and an investment analysis | Income, expenses, financing, risk, holding period, and exit assumptions |
Replacement cost is intentionally separate. It estimates the cost to repair or rebuild insured property under policy terms; it is not another name for market value.
Common misconceptions
These beliefs can lead to misreading estimates or misapplying one value type to the wrong decision. Select any to see the reality.
Questions to ask about any home value
Use this six-question check before relying on a number. This process is more reliable than choosing whichever value is highest, lowest, or most convenient.
What is this value called?
Read the precise label rather than assuming every estimate means market value.
Who created it?
A buyer, agent, appraiser, assessor, lender, insurer, or algorithm may use a different process.
Why was it created?
Identify the intended use: pricing, lending, taxation, insurance, or another decision.
What is the effective date?
Compare that date with later sales, market shifts, and property changes.
What evidence and rules support it?
Look for comparable sales, property facts, assumptions, local assessment rules, and limitations.
Does the source provide a review process?
Check how to correct factual errors, request reconsideration, or appeal — and note every deadline.
Real-world examples
These scenarios show how the three values interact in practice. Select an example to see the breakdown.
Frequently asked questions
Why is my assessed value lower than market value?
The assessment may use an earlier valuation date, an assessment ratio, mass-appraisal data, caps, exemptions, or other local rules. Confirm whether the record displays market, assessed, and taxable values separately before comparing.
Why did the appraisal differ from the purchase price?
The contract reflects an agreement between particular parties. The appraisal applies a stated definition, effective date, evidence, and assignment conditions. Differences can result from comparable selection, adjustments, market movement, concessions, bidding conditions, or property facts.
Can market value change without a new appraisal?
Yes. Market value can change when new sales occur, supply or demand shifts, financing conditions change, or the property changes. An appraisal is an opinion as of its effective date.
Who determines assessed value?
A state or local assessing authority determines it under applicable law. The office name, method, valuation cycle, and review procedure vary by jurisdiction.
Can I challenge a property assessment?
Many jurisdictions provide an administrative or judicial review process, but evidence requirements and deadlines vary. Read the assessment notice and official local instructions promptly.
Which value affects my mortgage?
The lender uses an appraisal or another valuation method permitted for the transaction, along with the contract price and loan-program rules. Ask the lender how the valuation affects the loan-to-value calculation.
Which value determines my property taxes?
The local system generally starts with an assessed or taxable value and applies the jurisdiction's tax rules and rates. Exemptions, caps, credits, levies, and special assessments may also affect the final bill.
Why is an online estimate different from an appraisal?
Online estimates can use different datasets, models, update schedules, and assumptions. They may not capture condition, renovations, legal issues, views, or other property-specific facts that a professional analysis considers.
Is appraised value always market value?
No. Many residential mortgage appraisals estimate market value, but an appraisal can be performed for another type of value or purpose. Read the report's definition, intended use, and effective date.