Why the Same Home Has Three Different Values

If you've ever looked at a property tax bill, a mortgage document, and a listing price for the same home and wondered why the numbers don't match — you're not alone. Assessed value, appraised value, and market value each answer a different question, calculated by different parties for different purposes. Confusing them can lead to real missteps, whether you're budgeting for property taxes, securing a loan, or negotiating a sale.

Who Sets Assessed Value Local county or municipal tax assessor
Who Sets Appraised Value Licensed or certified real estate appraiser
Who Sets Market Value The open market — buyers and sellers
Primary Use of Assessed Value Calculating annual property taxes
Primary Use of Appraised Value Mortgage underwriting and lending decisions
Primary Use of Market Value Pricing, listing, and negotiating a property sale

Understanding how each figure is derived — and where it applies — puts you in a stronger position as a buyer, seller, or homeowner.

Assessed Value: The Tax Collector's Number

Assessed value is the dollar figure your local government assigns to your property for the purpose of calculating property taxes. It is determined by a county or municipal assessor using a standardized methodology that often applies a fixed assessment ratio — for example, a jurisdiction might assess properties at 80% of their estimated market value.

Because mass appraisal tools and periodic reassessment cycles are used, assessed values can lag significantly behind current market conditions. A home that has appreciated sharply over three years may still carry an assessed value set during the last reassessment cycle.

Key points to know:

  • Assessed value directly determines your annual property tax bill.
  • It varies widely by state and municipality — some states assess at 100% of market value; others use ratios as low as 10–30%.
  • You have the right to appeal an assessment you believe is inaccurate, typically through a formal local process.

Assessed Value

A value assigned by a local government assessor used solely for calculating property taxes. It is often a percentage of estimated market value and may not reflect current sale prices.

Appraised Value

A licensed appraiser's professional estimate of a property's worth at a specific point in time. Lenders use it to determine how much they are willing to finance.

Market Value

The price a property would realistically sell for between a willing buyer and seller in a competitive, open market. It is set by actual transactions, not officials or algorithms.

Assessment Ratio

The percentage of a property's estimated market value used to calculate its assessed value. This ratio varies by jurisdiction and directly affects property tax calculations.

Comparable Sales (Comps)

Recently sold properties with similar characteristics — size, location, condition — used by appraisers and real estate professionals as benchmarks for valuation.

Appraised Value: The Lender's Benchmark

Appraised value is a professional opinion of a property's worth, conducted by a licensed or certified appraiser. It is most commonly required when a buyer is financing a home purchase — the lender orders the appraisal to ensure the property is worth at least as much as the loan amount being requested.

Appraisers evaluate the physical condition of the home, comparable recent sales in the area, square footage, lot size, and location-specific factors. For a deeper look at what this process covers, see what a home appraisal actually measures.

Appraised value is a point-in-time estimate — it reflects conditions on the day of the inspection. It is not a guarantee of what a buyer will pay or what a home will sell for. If an appraisal comes in below the agreed sale price, it can affect financing and renegotiation. Learn more about how appraisers weigh specific valuation factors when setting a number.

~10–100%

Range of assessment ratios across U.S. states

Assessment ratios vary dramatically by jurisdiction; some states assess at full market value while others use ratios well below 50%.

~5–10%

Typical AVM margin of error for home valuations

Industry analyses of automated valuation models suggest median error rates generally fall in this range, though accuracy varies by market and data availability.

Market Value: What Buyers Are Actually Willing to Pay

Market value — sometimes called fair market value — is the price a willing, informed buyer would pay a willing, informed seller in an open, competitive market, with neither party under pressure to act. It is not assigned by any official; it emerges from real transactions and current demand.

Market value is shaped by:

  • Comparable sales (comps): Recent nearby sales of similar homes set a reference range.
  • Supply and demand: In low-inventory markets, buyers compete, pushing prices above appraised values. In slower markets, homes may sell below assessed values.
  • Buyer perception: Features like school districts, walkability, and curb appeal influence what buyers are willing to offer.

Online automated valuation models (AVMs) attempt to estimate market value using algorithms and public data — but they carry meaningful margins of error. For a comparison of AVMs against formal appraisals, see Zestimate vs. professional appraisal.

This article is for general informational purposes only and does not constitute financial, legal, or tax advice. Consult a licensed real estate professional, appraiser, or tax adviser for guidance specific to your situation.