Making Sense Of All The Ways Your Home Is Valued

Assessed Value, Insured Value, Market Value.  It’s the same home, yet these numbers are most likely all different. 

WHY? The difference lies in the purpose of each number. 

 The assessed value of a property is determined by the local government (we’ll use city herein) for the purpose of calculating property taxes. Similar but less in depth to a realtors market analysis; assessments are done in July and by the time homeowners receive them in January, they would seemingly be out of date. But this doesn’t matter. The PURPOSE of this value is to provide the city the money it needs to fund local services such as schools, roads, and emergency services.

 How much you pay in property taxes is calculated by the mill rate; the money needed by the city divided by the combined assessed value of all the properties in that class, in that city. Whether or not your personal taxes go up or down largely depends on whether your personal property rose above or dropped below the average property value.

 The insured value of a property is the amount for which the property is insured, typically for the purpose of protecting it in the event of damage or loss. This value may be different from the assessed or market value of a property because the PURPOSE of this value is to determine the cost of replacing the home should it be destroyed, based on current construction and materials costs.

Unlike market value and assessed value, insurable value does not factor in the cost of the land, but rather calculates the amount required to completely reconstruct your home.

The market value of a property is the estimated amount for which a property should sell on the date of valuation between a willing buyer and a willing seller (factoring in that it’s an arm's length transaction after proper marketing and with both parties having reasonable knowledge of the relevant facts. Oof, that’s a mouthful). The PURPOSE of this value is to assist in listing the asset for sale at an appropriate price to facilitate a successful sale.

Market values are dynamic in nature because they depend on an assortment of factors including supply and demand and can change rapidly.

If you have any questions about your home's value, reach out and say hello; we'd love to hear from you.

Selena & Steve


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