Whether you're a first time home buyer, or a fifth time buyer/seller, these three terms always seem to throw everyone for a loop; Market Value, Assessed Value, and Appraised Value.
Not only will these distinctions affect your buying and selling decisions, but as Travis County (and many other Texas counties) mails out tax bills this month, understanding the values can help you make sense of your property taxes. Let’s dive in!
1. Market Value: What Would Your Home Sell For Today?
Market value represents the amount a buyer is willing to pay for a property under current market conditions. It is influenced by factors like property location, recent sales of similar properties, and the overall demand and supply in the real estate market.
As a Real Estate Agent, when we discuss listing your home or determining an offer price for a property, we're focusing largely on market value.
2. Assessed Value: The Taxman’s Take
Enter the Assessed Value. This is the valuation set by the local government (in our case, Travis County) to determine property taxes. The assessed value is derived from an assessment of your property and local real estate market trends.
Remember, this month, Travis County begins mailing out tax bills. The amount you owe is calculated by applying a tax rate to your home’s assessed value. While it's rooted in the market, this figure might not be as high (or as low) as the current market value. Currently, Texas homeowners are subject to a $40K Homestead Exemption from ad valorem tax by a school district, but this is likely to increase to a $100K exemption after the upcoming November 7th election.
3. Appraised Value: The Lender’s Lens
When you buy a home and require financing, or when you're refinancing an existing mortgage, enter the Appraised Value. This is an unbiased estimate of a home’s worth provided by a licensed appraiser. Appraisers consider recent sales, property condition, neighborhood input, and several other factors.
The appraised value is crucial for lenders. It assures them that they're not lending more money than the property is worth. If the appraised value comes in lower than the sales price, the buyer and their agent may need to restructure or renegotiate the contract.
Why is this All Important?
By understanding these values, you’re not only equipped to make informed real estate decisions, but can also effectively contest property tax assessments if you believe they're too high.
Austin is constantly evolving, and with it comes an efficient real estate market. For those considering buying or selling, understanding the nuances of these values can save time, reduce confusion, and potentially save you money.
Wrapping It Up
Whether you're scratching your head at your tax bill, strategizing your next property investment, or just an avid learner of Austin’s real estate tapestry – knowing the difference between Market, Assessed, and Appraised values is your key to clarity.
For more insights or guidance on navigating Austin's ever-changing real estate market, reach out. I’m here to help!
