Home Value vs Assessed Value vs Market Value: What's the Difference?

The same home can have three completely different "values" — and each one serves a different purpose. Assessed value is set by your local government and used only to calculate property taxes. Appraised value is determined by a licensed appraiser and used by lenders to approve mortgages. Market value is what a buyer will actually pay in the current market, and it's the number that matters for buying and selling decisions.

Assessed value: what the government thinks your home is worth

Assessed value is set by your county or municipal tax assessor for the purpose of calculating your annual property tax bill. It is typically a percentage of market value — often 60–100% depending on jurisdiction — and it updates on a schedule that varies by location (annual in some counties, every 3–5 years in others).

Assessed value has no bearing on what you'd sell your home for. It's not what buyers will pay. It's not what a lender will finance. It's purely a tax calculation input.

Appraised value: what the lender requires

An appraised value is determined by a licensed appraiser hired (and paid for) by the buyer's lender to confirm that the property is worth at least the loan amount. The appraisal protects the lender's collateral — if the buyer defaults, the lender needs to recover the loan amount from selling the property.

Appraisals use similar methodology to a CMA — comparable sales, condition assessment, market trend analysis — but are more formal, carry legal weight, and are required for all conventional mortgage transactions.

Market value: what buyers will actually pay

Market value is the price a willing buyer and willing seller agree on in an arm's-length transaction, with neither under duress and both having reasonable market knowledge. It's not theoretical — it's what your home actually sells for.

Market value is determined by supply and demand. In a market with low inventory and high buyer demand, market value can exceed appraised value — creating the "appraisal gap" phenomenon where buyers must cover the difference in cash. In slow markets, market value can fall below appraised value.

Side-by-side comparison

Why these values can differ dramatically

• In fast-appreciating markets, assessed value often lags market value by 20–40% because tax assessors update on a fixed schedule
• A recent renovation adds to market value immediately but isn't reflected in assessed value until the next reassessment cycle
• An appraisal can come in below market value if buyer competition has pushed prices above what recent comparables support
• Non-disclosure states have limited data for assessors and appraisers, increasing variation between all three values

Which value matters for your situation?

Selling your home? Market value is all that matters. Get a CMA from a local agent or start with an instant AVM tool like HomeScore to establish your range.

Refinancing? The appraised value determines how much equity you can access and whether you need PMI. Lenders order the appraisal — you can't choose your appraiser.

Appealing your property taxes? Assessed value is what you're challenging. Gather comparable sales data showing your home's assessed value exceeds what similar homes sell for.