It bothers me when people confuse real estate terms because many decisions are made based on those terms.
First, is market value. This is the price at which a home transacts between a willing buyer and a willing seller. In truth, you don't know what market value is until you have a signed real estate contract (and the deal closes).
Second, is the assessed value of your home. This is the estimate made by a city assessor and is based on recent sales of typical houses in your community. The assessed value is used for determining property taxes. It can be challenged if you think assessments are too high.
The last term is appraised value. I love this one because it can be almost anything you want it to be. It is the opinion of a theoretically unbiased third party who estimates market value. They are professionals but they are paid by bankers, mortgage brokers and real estate agents. There is a hint that their opinion of "market value" might vary based on who pays them. No, say it isn't true! Bankers tend to use appraisors who deliver the appraisal that they need to make the loans. The hell you say. Beware of appraised values.
I have added a new category of people that go to the head of my financial "food chain". They are the ultimate predator over real estate agents, car salesmen, insurance brokers and lawyers. It is the banker. In recent years, bankers have tended to make marginal loans. The 10% down requirement is no longer a deterrent. Appraisals of home values can be nudged higher (beyond market values) by making some absurd assumptions. Why do bankers become so magnanimous? It is in the high interest rates and fees, Grasshoppers. Yep, the bankers stick it to the guy who can least afford it. And then (are you ready) they charge management fees, processing fees, late fees and penalty fees to make even more money. No you say! Bastards!
If you are willing to go into really high risk territory, bankers will lend you 20%-25% in excess of home equity prices. How can they do it? Check the interest rates. Check the interest rates.
So what do you do? Trust the assessed value. It is usually based on sales of similar type homes to yours. Assessed values can be challenged. It is still an opinion by one person.
Beware of appraised values. They are influenced by many forces. Be suspicious of the people paying for the appraisal. The appraisal of your home determines whether you might sell.
You won't know the market value of your home until it sells. Alas you finally get an answer.
Love,
Dad