What is the difference between fair market value, appraised value and assessed value? Here’s an explanation.
Fair market value is a subjective estimate of what a willing buyer would pay a willing seller for a property. An estimate of fair market value can be determined by a REALTOR®.
Regardless of what a buyer is willing to pay, if the buyer wants to obtain financing, their lender will typically require an appraisal prior to approving the loan. A home’s appraised value is determined by a licensed, professional appraiser – a disinterested third party who makes a thorough investigation of the property, the neighborhood, market conditions and recent comparable sales in the area to determine current value.
Assessed value is a dollar value used by your local government to calculate property taxes. The local assessor determines this value after taking comparable sales and property inspections into consideration.
In general, the assessed value tends to be lower than both the appraised and fair market value of a property.
