Assessed Value vs Market Value Explained

By Nick Hazzi

Nick has been in the real estate industry for over 15 years and has a wealth of knowledge and experience. He is passionate about his clients and dedicated to ensuring they get the most out of real estate, providing value far beyond any sale.

Every year, when property assessments are released, many homeowners experience the same reaction. They see a new number and immediately assume their home has gone up or down in value. That assumption feels logical, but it is also misleading.

An assessed value does not reflect what a home is worth on the open market, and treating it as such often creates unnecessary stress or false confidence. That’s because assessed values are created for taxation, not for pricing or selling.

The gap between what your home is worth and what it’s assessed for is often wide, and understanding that difference is key to making informed decisions as a homeowner.

Why do assessment values create confusion? Most homeowners believe an assessment reflects real changes in their property’s value, but the process behind assessments tells a different story. A simple question helps explain why. When was the last time a city assessor walked through your home? For most people, the answer is never. Assessors do not visit properties, inspect interiors, or evaluate upgrades.

Instead, assessments are completed at a desk using basic data points. These usually include the year the home was built, the square footage, and the lot size. From that limited information, an estimate is generated. This method might work for tax calculations, but it does not reflect how homes actually perform in the real world.

What do assessments leave out entirely? One of the biggest problems with assessed values is what they ignore. Condition is not factored in. Updates are not considered. Maintenance is not reviewed. A home that has never been painted, updated, or properly cared for can receive an assessed value similar to that of a home that has been fully renovated and meticulously maintained.

On paper, these homes may look alike. In reality, buyers view them very differently. This gap between paper data and real conditions is why assessed values often fail to match market expectations.

Why are assessments not used to determine market value? In real estate, market value is based on evidence, not estimates. Professionals do not use assessed values to determine pricing because they do not reflect buyer behavior. The only reason assessments often come up in conversations is that homeowners see them first and naturally use them as a reference point.

It is important to understand that an assessment is not a pricing tool. It is an administrative estimate created for tax purposes. Using it to judge your home’s value can lead to incorrect conclusions.

The timing problem most people overlook. Another key issue with assessments is timing. Most assessment values are calculated using data from July to July. By the time homeowners review those numbers in January, the data is already outdated. Market conditions may have changed significantly since then, especially in areas where pricing shifts quickly.

This delay makes assessments even less reliable as a snapshot of current value. What was true last summer may not apply today.

How is real home value determined? The only accurate way to understand what a home is worth is by looking at recent sales. This involves reviewing homes similar in size, location, and condition that have sold under current market conditions. These comparisons show what buyers are actually paying right now, not what an estimate predicted months ago.

Recent sales data provides context, clarity, and a realistic baseline. It reflects demand, competition, and buyer priorities, which are the true drivers of market value.

Understanding your home’s value shouldn’t feel confusing or stressful. When you rely on real sales data instead of assessed estimates, you gain a clearer picture of where your home truly stands in today’s market. If you’re thinking about selling or simply want clarity around your pricing, feel free to call or text me at 250-878-6416 or email me at nick@vantagewestrealty.com. I can help you make confident decisions based on facts, not assumptions.