In many cases, there's a dynamic tension among assessed, appraised and market values when evaluating a home. An owner hopes that, for tax purposes, his home is assessed at a low price. However, he also hopes it carries a high market value when it goes on the market. And he especially hopes it appraises for that value, or at least for what the buyer offered for it, when it sells.
Market value is the highest price a ready, willing and able buyer will pay for a property. It's also the lowest price the seller of that property will accept. Usually, buyers and sellers arrive at what's called a meeting of the minds in this regard. When they do, a price is agreed on and a sale is consummated. In many real estate transactions, a lot of negotiating will go on to arrive at the market value.
Three particular features go into a home's market value. The first has to do with location. A home is usually worth more in a more popular neighborhood than it would be in a neighborhood in decline, for example. Market value also depends on the home's condition. If it needs repair, it could be worth less. Lastly, market value depends on how long a home could take to sell to a ready, willing and able buyer.
Of the three values, real estate professionals often look at how long a home would take to sell when they advise on its market value. In a rational market, 30 to 60 days is considered the norm. Keep in mind, though, that economic conditions in the broader economy can affect this time frame. Still, it's generally thought that if a home takes longer than 60 days to sell, it's been priced too high for its market.
Sometimes, a home's market value may not have much in common with its assessed value. Remember, an assessor gauges the home on its taxable value. This may not be closely related to what it could sell for. Appraised value, however, tends to align more closely with market value. However, problems arise when a home is priced too high in its market. Low appraisals often result, to the consternation of both the seller and the buyer.