Why One Home Has Three Different Values
Ask a homeowner, a lender, and a county tax office what a particular house is worth — you may get three different answers. That's not an error. Each number — appraised value, market value, and assessed value — is calculated for a specific purpose using a specific methodology. Mixing them up can lead to real consequences, from a failed mortgage to an inflated property tax bill you could have challenged.
Understanding what each figure means, who produces it, and when it matters is foundational knowledge for anyone buying, selling, refinancing, or simply owning a home. See our overview of what drives home value for the broader factors underlying all three numbers.
Appraised Value: The Lender's Anchor
Appraised value is a professional opinion of a property's worth, produced by a licensed or certified appraiser following a formal inspection and analysis of comparable sales. Lenders require an independent appraisal before approving most purchase mortgages or refinances — it protects the institution from lending more than the property could realistically secure.
Appraisers follow guidelines set by the USPAP and typically use the sales comparison approach, adjusting recent nearby sales for differences in size, condition, age, and features. The result is a single-dollar figure tied to a specific date. If an appraised value comes in below the agreed purchase price, buyers and sellers often have to renegotiate, the buyer must cover the gap in cash, or the deal falls through.
For a deeper look at how appraisals and market prices diverge, see Appraised Value vs. Market Value.
Market Value: What Buyers Actually Pay
Market value — sometimes called fair market value — is the price a willing, informed buyer would pay a willing, informed seller in an open, competitive market, with neither party under unusual pressure. It's the most fluid of the three figures because it's shaped in real time by supply, demand, interest rates, neighborhood trends, and buyer sentiment.
Market value isn't officially assigned by any single authority. It emerges from actual transactions. Real estate agents estimate it through a comparative market analysis (CMA), while automated tools attempt to track it algorithmically. Those tools can be useful starting points — online home value estimators vary significantly in accuracy and should be interpreted with care.
Market value is the number that most directly determines a listing price, and it can shift meaningfully in the weeks between an offer and a closing.
Assessed Value: The Tax Baseline
Assessed value is assigned by a local government assessor — not an independent appraiser — for the specific purpose of calculating property taxes. Most jurisdictions assess properties at a percentage of estimated market value called the assessment ratio, which varies widely by state and county. A home with a $400,000 market value in a jurisdiction with an 80% assessment ratio would carry a $320,000 assessed value.
Assessors typically rely on mass appraisal models rather than individual property inspections, which means assessed values can lag behind rapidly changing markets. They are updated on cycles that vary by jurisdiction — annually in some states, less frequently in others.
If you believe your assessed value is too high relative to actual market conditions, most jurisdictions provide a formal appeals process. Property owners who successfully appeal can reduce their ongoing tax burden. To understand how these values are tracked over time, this guide to home value tracking methods covers key indexes and assessor records.
You Can Challenge Your Assessed Value
If your property's assessed value appears higher than current market conditions support, most local jurisdictions allow homeowners to file a formal appeal — often called an assessment appeal or tax grievance. The process, deadlines, and required evidence vary by location. Check with your county assessor's office for specific procedures. A successful appeal can lower your annual tax bill.
This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Consult a qualified professional regarding your specific property and local regulations.