Understanding Real Estate Valuations
Market Value Market value is generally defined as the most probable price a property would sell for in a competitive and open market. It reflects what a reasonable buyer would pay to a reasonable seller, under typical conditions. This is the guiding principle for pricing your home competitively. Appraised Value An appraisal is a professional evaluation of your property’s worth at a specific point in time. Lenders rely on appraised value when determining how much to finance. It impacts your Loan- to-Value (LTV) ratio, which, if above 80%, often requires the buyer to purchase private mortgage insurance (PMI). Appraisals are conducted by licensed professionals who consider factors such as size, location, improvements, depreciation, and comparable sales. Assessed Value The assessed value is used primarily for tax purposes and is determined by your local municipality. It often differs—sometimes significantly—from the actual market or appraised value. In fact, studies show that nearly 60% of U.S. properties are assessed higher than their current market value.
So… What Is Your Home Really Worth?
Before you can sell, you must clearly understand the difference between value , worth , and price . Each stems from different influences and plays a different role in the home-selling process. Two Key Methods to Determine Your Home's Value 1. Professional Appraisal Appraisals are especially useful for gauging your home’s value from a neutral, third-party perspective. A certified appraiser conducts an in-depth property analysis, factoring in:
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