Depending who you are talking to about the price of a house you have to be clear what numbers you are using. If you’re not both referring to the same lingo, you could each walk away from the conversation thinking different things and not knowing it. Here are some definitions that may be helpful.
The Appraised Value of a property is an opinion of the value of a home prepared by an Appraiser. His opinion is based on a number of factors or methods of determining the value. He will look at things such as recent sales of similar properties, replacement cost and his own knowledge of the local marketplace. Lending institutions will typically use the appraised value in determining the total amount of money they are willing to lend when the property buyer is applying for a mortgage.
The Assessed Value of a home is the value determined by the tax assessor for the local city or town. This value is used by the municipality to determine the amount of tax that the property owner must pay. The Assessed value will often be multiplied by a mil (Millage) rate to determine the actual tax. In other words if the property has an assessed value of $100,000.00 and the mil rate is 5, the tax on the property would be 5 X 100 or $500.
The Market Value of a home is the probable price that a house will sell for if it is put on the market. It is determined by an analysis of the market (usually by a Realtor). The analysis should include looking at similar properties that have sold within recent times as well as looking at similar prices for homes currently on the market. In addition, if done properly, the analysis should also include those homes that were put on the market but did NOT sell, and were withdrawn.
The List Price of a home is a number assigned by the seller when he puts his home on the market. It is essentially what he hopes to sell his property before. It has no formal mathematical relationship to the actual market value of the home. In determining the list price, any reputable Realtor will recommend that it be very close to the Market Value if the seller wishes to sell in a timely fashion.
The sale price of a home is the actual price that the home most recently sold for.