When buying or selling real estate, property value and market value are two important considerations taken into account. Learn about the differences between the two and how each value is calculated.
Property value refers to the fair or true market value of a piece of property. Established by a professional appraiser, the property value is used to approve mortgages and calculate property taxes. The assessment does not take into account what the property might sell for, only what it is worth at face value.
When purchasing a new home, it is helpful to know whether or not there is a large difference between the property and market value, as the buying process may be more difficult if the numbers vary greatly. Additionally, if you don’t agree with the results of the assessment, an appeal can be made.
At any given time, market value is an estimate on the highest price a buyer would pay and the seller would accept within a reasonable time period. Market value varies greatly depending on the city and neighborhood. The current condition of the home and the real estate economy is also taken into account. Comparables, or prices of homes recently sold in the nearby area, are often used to establish market value.
You can improve the value of your home through minor home improvement projects, landscape/yard enhancement and remodeling rooms such as the bathroom and kitchen. However, be careful to not improve the property so much that it exceeds the average market value of other homes in the area, which can result in losing money on the sale.