The Three Values of Your Home

Assessment, appraisal, market value: The words are tossed around like dice, but how many of us know what they really mean? 

With both buyers and sellers getting hung up on these numbers, we've created a target graphic to represent real estate's three values. In the outer ring, annual tax assessments are valued every two years, using 18-month-old data; in the center ring, appraisals are valued using data from the past three-to-six months; and as the bullseye, the market value is what your house is worth RIGHT NOW! We explain the three values below, in order of their importance:

1. Market Value. The market value is your home's proverbial bullseye value. Influenced by the real estate market, housing trends, and even buyer emotion, your home's market value is constantly on the move. (And if you're a homeowner in Boulder, that move is headed skyward - read our latest newsletter yet?) 

Market Value looks at real estate with an eye toward the future, whereas appraised value and assessed value look at the past. For example, a listing can lean high compared to its comps when the market is showing an upward trend and inventory is low. Another contributing factor: eager, emotional buyers who start a bidding war on their dream home, pushing market value even higher. Think of your home's market value as a snapshot of a moment in time; it's that current. 

2. Appraised Value. This value is the NBT (Next Best Thing) to your home's market value. An appraiser calculates your home's appraised value based upon comparable sales in your neighborhood from three to six months prior. Even with access to MLS listings, appraisers often look to real estate agents to give them the scoop on market updates, trends, and insider information. Appraisers still have a better gauge of your home's current value than the county assessor's office. Which leads us to... 

3. Assessed Value. This value's primary purpose is to calculate annual real property taxes owed to the county, and is typically much lower than market value (insert a collective sigh of relief from Boulder County homeowners.Assessed every two years, the county uses data from the previous 18 months, and only takes these high-level factors into consideration: location, living area, finished basement, age, and number of baths.

This means the assessor doesn’t know if your floor plan rocks, if your yard is picture-perfect, or if your appliances are new and high-end. However, they do review building permits and are made aware of any permit changes. When selling your home, market value always trumps assessed value.