What's the difference between the appraised value and the fair market value of a home? One is determined by a lender and the other is determined by the market.
When it comes to the value of a home, what's the difference between the appraised value and the fair market value?
Fair market value is basically defined as the most probable price a buyer is willing to pay and a seller is willing to accept for their home under the current market conditions. Appraised value is the value of a property in the opinion of a single appraiser.
In most cases, appraisals are ordered by a lending institution when a house is purchased. It allows them to justify the amount of the loan that the borrower is seeking. We'll talk later about what happens if the appraisal comes in below the sales price.
Both concepts differ from a property's assessed value. The assessed value of a property is primarily for determining property taxes.
“
”
Texas is a non-disclosure state, meaning that sold properties aren't publicly recorded. Our local county appraisal district assesses property values annually using mass appraisal methods instead of evaluating each home independently. These mass appraisals evaluate a particular market area and take the average area appreciation and depreciation and apply it to every property in the group.
Appraised value and fair market value both differ from assessed value.
”
A Texas county appraisal district may not increase the assessed value of a homestead by more than 10% in a given tax year. This is another important topic I'll cover in an upcoming video. I'll also touch on why many assessed values vary so dramatically from their appraised or fair market values.
These are complicated topics, so if you have any questions or you'd like me to clarify any of these points, feel free to give me a call or send me an email. I'd be happy to help!
