I've always enjoyed this illustration showing how a home's value is perceived depending on the different perspectives of value. I saw a similar meme today on Facebook with the seller saying $400K and a cat saying $150K! Remember, when selling, it only matters what the seller and buyer (and later the appraiser) all agree on with value.
Every home has 5 different values. Assessed Value, Appraised Value (Insurance & bank), Market Value & Owner Value. These values are separate entities and can often be mistaken for one or another.
1. Assessed value is for tax purposes and is re-active. In other words, sales have to happen first and regardless of what happens after the assessed date.. the value remains the same for one full year.
There are two types of Appraised value, one for insurance purposes & one for lenders. For insurance purposes you want to make sure the appraised value at least covers the cost to rebuild your home. For lending purposes.. the appraised value always comes lower based on the lenders loan to value ratio.
Market value is what your home is worth at any given time. Market value is fluid, it can go up and go down on a daily basis. Monitoring a homes Market Value requires a thorough knowledge of recent properties that sold, are currently on the market and properties that have failed to sell during their original listed term.
Last of course is Owner value. This is what a home is worth to the owner. This value may be above, at or below Market value. Obviously, these 5 different values must align to a certain degree before a sale can be made.
Thinking of moving? Call me Tom Ikonomou for a complimentary market evaluation today.
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Tom Ikonomou - RE/MAX City.
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All Rights Reserved. Trademarks REALTOR® & MLS® owned or controlled by the Canadian Real Estate Association. Used under licence"All information provided by this author is only an opinion, is not guaranteed, may be based on information collected from several sources, and may be time sensitive. It is not necessarily representative of the opinions of RE/MAX City..
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