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Kelly, Other/Just Looking in San Francisco Bay Area

What is the difference between market value and appraised value?

Asked by Kelly, San Francisco Bay Area Tue Oct 23, 2007

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Appraised value is what the home should sell for on paper based on comparables. Market value is what a willing and able buyer will pay. Appraisals used to re-finance a home or get a second mortgage should never be used as market value. In those instances they may have just given you the number they needed to justify the loan. A lot of people are learning their home is not worth the appraised value.
2 votes Thank Flag Link Tue Oct 23, 2007
Market value and appraised value can often be the same, as well as just as often be different.
Appraised value usually puts the most weight on past history of real estate sales. Market value can differ as real estate market dynamics can quickly change course making past sold values irrelevant.
In a rising market, I will put a lot of weight on recent pending sales (properties in escrow waiting to close) in addition to the supply and demand ratio of available homes for sale compared to the volume of recent pending sales activity. In a declining market, yesterday’s sold property values are usually higher than what a property is worth today. I usually put a lot of weight on the value of competing homes for sale in addition to the supply and demand ratio and lengthening marketing time to sell a property.
1 vote Thank Flag Link Tue Oct 23, 2007
Kelly,
Appraised value is a "likely sale price" usually conservatively arrived at if done by an independent appraiser. If the appraisal is being done for sale or refi then the number is the target but it is the appraisers responsibility to protect the lender.
Market value is the price "an able buyer will pay" for the property and is subject to current market conditions.
Web Reference: http://www.jedlane.com
0 votes Thank Flag Link Mon Nov 5, 2007
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
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What do you mean by market value? A market value can be what the agent/seller think the home is worth. A market value can also mean what the home will sell for. An appraised value is what the appraiser thinks the home is worth. What the home will sell is what the home is worth.
0 votes Thank Flag Link Tue Oct 23, 2007
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