Market Value, Tax Value, Appraisal Value, Automated Value Calculation...

HOME VALUATIONS - They are all COMPLETELY different!

What's the difference?

Fair Market Value, or FMV, is the price a home should sell for under "normal" market conditions. "Normal" is a subjective term, but it generally means that the local housing market is not in distress due to a large number of foreclosures or a recent natural disaster like an earthquake or hurricane. FMV is usually determined by comparing the property to similar properties within a mile radius, and is based upon what price these similar homes sold for within the past 6-12 months.

A home's Tax Assessed Value, or TAV, is usually a percentage of the property's FMV. Most states assess homes at 80% or 90% of FMV though some states assess at 100%+. Some counties around the country, especially in areas with depressed housing markets, only reassess homes every five or 10 years due to the high cost of the reassessment process.

When the taxing authority reassesses, they usually have what is called, "Assessor Agents." These agents are not Appraisers. They will use a model called "mass appraisal." This model is not reflective of a true Appraisal. The tax value is called, "Assessment." 

Usually, in-between re-assessments, the Assessor will record the new sales price, because the property is usually appraised. This sales price, after closing, normally becomes the new "Assessment." 

An evaluation of a property's value based on a given point in time that is performed by a professional appraiser during the mortgage origination process is called Appraisal Value. The appraiser is usually chosen through an assignment system as requested by a lender, and the appraisal is paid for by the borrower.  It is based on comparable, nearby, closed sales in the last 6 months.

In a typical, healthy, economy, then typical appraisal methods are best.The two appraisal types are cost approach to value and the income approach which is highly significant when considering rental markets. There is nothing that can be compared to an Appraisal. 

Automated and/or online valuations are the generally the least accurate. These are very popular and can be found around the web. They are primarily used as advertisement to get visitors to a website. They are formulated values based on an algorithm that scrapes the web and public records for any information it can find, accurate or not, to generate an "automated value" for a home. It's not just the data sources that make these estimates so inaccurate but the lack of actual knowledge about the property being estimated when it comes to condition, value-added features, etc.

The most accurate values are generated by skilled professionals.

I know - that's a lot. Have questions? Just call me!

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Keller Williams Premier Realty, 3555 Willow Lake Boulevard, Vadnais Heights, Minnesota 55110

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