Assessed Value vs Market Value: Understanding the Difference

It can be very confusing distinguishing what is meant by the terms “assessed value,” and “market value” when either buying or selling a home. The assessed value is often much less than the market value so buyers would prefer the assessed value while sellers would much rather sell at the market value of the home.

the market value is how much your home is worth currently on the market and the assessed value is typically based on a percentage of the appraised value which is used to determine how much property taxes you will owe on your home. This is usually a point of contention when the assessment arrives in the mail because most homeowners don’t agree with the taxes stated as due.

The market value is usually what the home will sell for and is typically the price used for listing the property.

Homeowners are often surprised when they receive information from the local (city or county) tax appraiser’s office. Most of the time, the homeowner is shocked to see that the assessed value of their home is much lower than what they believe their home to be worth. Some homeowners tend to believe that the assessor of real estate sits at his or her desk throwing darts at numbers in order to determine the assessed value of a home, but according to the Bureau of Labor Statistics (BLS), the real estate appraiser or assessor does much more than that to determine the assessed value of a home.

The role of the real estate assessor is to:

  • Make sure that the legal descriptions of properties jive with the public records
  • Inspect properties looking for unique characteristics
  • Photograph the interior and exterior of properties
  • Use “comparables,” or similar nearby properties, to help determine value

When performing the estimate, assessors are supposed to note things that would affect the assessed value of the home such as being too close to a noisy highway, or any additions or improvements made to the home. These are things that will affect the assessed value.

Once the value is determined, a multiplier, usually somewhere between 60 and 80 percent is used to then determine the assessed value. Example: Let’s say an assessor uses an 80% multiplier. If he values a home at $100,000 then assessed value used for tax reasons would be $80,000.

Market value is influenced by homes that were recently sold in the area, the location of the home in relation to schools, and the future impact of construction for that area such as new road construction, future malls, etc. And, of course, the market value can be influenced by the economy.

When applying for a home loan, banks and lending institutions typically look at the market value. They consider the market value the most accurate and dependable so that is what they base their loan award decisions on.

Source – Learn more


Joe Frieders, Managing Broker 

Swanson Real Estate 

815-786-9418 Sandwich

630-553-3333 Yorkville

815-693-4958 Direct

Areas Served: Dekalb, Lasalle, Kendall counties Illinois including Big Rock, Earlville, Hinckley, Leland,

Naperville, Newark, Oswego, Plano, Sandwich, Sheridan, Somonauk and Yorkville