What is market value?
Market value is simply the price at which something will sell within a reasonable period of time. In a normal or average real estate market, “reasonable” means one to three months.
A number of factors may affect your home’s market value, including:
- External characteristics – “curb appeal,” home condition, lot size, popularity of an architectural style of property, water/sewage systems, sidewalk, paved road, etc.
- Internal characteristics – size and number of rooms, construction quality, appliance condition, demonstrated “pride of ownership,” heating type, energy efficiency, etc.
- Supply and demand – the number of homes for sale versus the number of buyers; how quickly the homes in your area sell.
- Location – desirability for a particular school district, neighborhood, etc.
What is appraised value?
The appraised value of a house is a certified appraiser’s opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $350-$450.
Why wouldn’t the appraised value be whatever the buyer was willing to pay? Because the actions of a specific buyer don’t always represent the actions of a typical purchaser.
What is tax assessed value?
The tax assessed value for a home is not market value.
Property Taxes are a primary source of revenue for many local governments. They’re also a significant expense for homeowners, year in and year out. Even after you’ve paid off your mortgage, property taxes remain. The assessed value of your property is determined annually. The assessed value is multiplied by an assessment rate to determine the taxes due.
There are many exemptions that a home owner might declare to decrease their assessed value. The most common for owner-occupant is a Homestead exemption (learn more). The decrease in your property’s assessed value says nothing about the actual market value of your property, but it does help lower your tax bill.
Property taxes pay for things like public schools, community colleges, libraries, local government employees’ salaries, parks and recreation, sanitation, sewer, police and fire protection, roads and other local needs such as mosquito control. Each of these items can have its own percentage rate that is multiplied by the assessed value of your property to determine a portion of your bill. The taxes you owe for each item are totaled to determine your final property tax bill.
What’s a house worth?
A home ultimately is worth what someone is willing pay for it. Everything else is an estimate of value. To determine a property’s value, most people turn to either an appraisal or a comparative market analysis. An appraisal is a certified appraiser’s estimate of the value of a home at a given point in time. Appraisers consider square footage, construction quality, design, floor plan, neighborhood and availability of transportation and schools.
A comparative market analysis is a real estate broker’s or agent’s informal estimate of a home’s market value, based on sales of comparable homes in a neighborhood. Most agents will give you a comparative market analysis for free.
Where can I learn more about appealing my property taxes?
Contact your local tax assessor’s office to see what procedures to follow to appeal your property tax assessment. You may be able to appeal your assessment informally. Mostly likely, however, you will have to go through a formal tax-appeal processes, which begin with an appeal filed with the appropriate assessment appeals board.
What is an escrow account?
An escrow account is a trust account established by the lender to hold money to pay for real estate taxes and homeowners insurance premiums as they are received each month/year.