Appraised Value Verses Market Value

Dated: 03/08/2013

Views: 837

Value is based on objective and subjective factors. A home installed with Travertine flooring throughout would have a greater objective value than would a home with concrete floors. Subjective value, on the other hand is affected by the relative work an individual places on a specific item, although a beautifully designed and constructed home with expensive materials still may have no value to someone who does not want such a home.

Real Estate may have many different kinds of value at the same time, for example, market value, appraised and taxable values, insured value, mortgage value, and depreciated value. Often value is not the same as price, nor is it the same as cost.
Canyon Vista Realty | Appraisal Value VS Market Value

Price is the amount of money that is ultimately paid for a property

Cost is the capital outlay for land, labor, material, and profits necessary to bring a property into existence.

Appraiser use comps (comparable market sales) of local properties sold within the last six months to value your home. With today’s rapidly rising seller’s market, six months old information is ancient history in some neighborhood communities. Appraised value does not always equal the true market value, or what the home will sell for on the open market.

REALTOR'S give a comparative market analysis, an informal estimate of market value based on comparable sales. Lenders on the other hand will use the appraised value to determine a new mortgage amount.

Market Value
this is the price that buyers looking at a home are willing to pay for it, market value is not an exact science, but an introduced concept from individuals and companies (real estate brokers/agents) as a business tool. Value is subject to Sellers and Buyers perception and interpretation of parameters that they decide to take into consideration.

Canyon Vista Realty- Real Estate Home ValuesMarket value can take into account factors that are completely out of the Sellers control, good vibe and bad vibes; a couple walks into the home and it reminds them of their very first home which might make the home worth more (good vibe), however the same couple could have a different feeling like the home is haunted (bad vibe) and this would cause a Buyer not to buy.


Appraised Value
is basically what the bank thinks a home is worth. This can include everything from what neighborhood the house is in to how many fixtures there are in the kitchen. The appraised value tends to be unbiased, because the bank isn’t looking to bargain with anyone. They need an accurate assessment.


It is very rare that appraised value of a home is the same as market value.


(Let's recap) - Appraised Value of a home is determined in order to justify the rate of the mortgage loan. This price is based on historical data and previous sales comparisons. That means sales of similar homes in the past six months. Some problems may be encountered if there is a large gap between the appraised value of the home and purchase price being offered.

Market Value is based on a informal estimate based on comparable's in subject homes neighborhood. 

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Louis Williams

As the CEO for The Williams Team, it is my mission to see that your Real Estate Transaction meets and exceeds your expectations and that you are treated honestly and fairly. I work hard to insure that....

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