How much is your home worth? The answer will vary depending on who you’re asking. A potential buyer who wants to get you down in price? A licensed non-partial real estate appraiser hired by a bank to determine how much they should loan you? A listing agent who wants you to sell your home at the highest price? A tax assessor who is most likely valuing an entire neighborhood at once? Here we will explain how the value of your home can vary.

Market value is the value that is perceived by the market. It takes a buyer and a seller under normal market conditions to reach this price. Distressed real estate like bank owned properties (REOs) or a short sales are usually not priced to sell at market value. Neither would a standard sale where the homeowner needs to sell immediately–like during a job transfer, divorce, or death in the family where the surviving spouse can’t afford the mortgage on a single income.

Typically a broker or real estate agent attempts to figure out the market value of your home to determine the list price. This is done by a Broker Price Opinion (BPO) or Comparable Market Analysis (CMA). This is usually an educated starting point because in the end, a buyer and seller determine the market value.

Tax value is the value that the local tax assessor places on the property for tax purposes. Tax value is only used for this reason. In California for example, properties are assessed when they are sold and that is the value that is placed on it. In other states, the tax values of properties are periodically reassessed. Some states also limit how much property taxes can increase year to year. The criteria for tax values differ from city to city, county to county, and state to state.

Appraised value is whatever value a licensed appraiser places on the property for whatever purpose it states in the appraisal. Appraisals are usually done on a property by a bank before a borrower can obtain financing. If a bank is going to loan on a property, they are going to require you get an appraisal to make sure they are not over-leveraging you. For example, if you buy a house for $100,000 and the bank is willing to give you an 80% loan, you should in theory be putting $20,000 down. If the home only appraises for $80,000, you’ll only get 80% of $80,000, so you’ll have to come up with the difference in cash which is a $16,000 difference.

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