A calculated home value isn’t necessarily what you believe your home is worth. Recognizing this helps avoid overpricing, a major factor that leaves homes languishing on the market or unsold. MARKET VALUE, APPRAISAL VALUE, AND ASSESSED VALUE Th e price at which to list a home is the seller’s decision, although a savvy seller will solicit professional advice or work with a trusted real estate agent to arrive at that decision. Knowing the real estate concepts of “market value,” “appraisal value,” and “assessed value” allows the home seller to more meaningfully engage with a real estate agent in coming to a determination of a home’s listing price. “Market value” is the probable price a property should bring in a competitive, open market under conditions requisite to a fair sale. Essentially, this is a pre-negotiation opinion of what a house should bring in its local market — i.e., its geographical area, generally an area such as a suburb or neighborhood. In other words, in what range do similarly situated houses in the area/ neighborhood sell for? “Appraisal value” is an evaluation of a property’s worth at a given point in time that’s performed by a professional appraiser. Appraised value is an important factor in loan underwriting and determines how much money could be borrowed, and under what terms. For example, the Loan to Value (LTV) ratio is based on the appraised value. Where LTV is greater than 80%, the lender generally will require the borrower to buy mortgage insurance. “Assessed value” is the amount local or state government has designated for spe cifi c property and frequently diff ers from market value or appraisal value. Th is assessed value is used as the basis of property tax and when a property tax is levied. Th e 11
Powered by FlippingBook