Why Is Market Value Different From Assessed Value

As a property owner in the Lone Star state, understanding your property value is important on many levels. Your property value helps give you an idea of your net worth, how much you could potentially sell your home for and how your local economy is doing. And, most importantly,  it can greatly affect your property taxes for better or for worse. You may be sitting sweet based on the market value of your home since the demand for houses  is so high. According to realtor.com home prices in North Texas are up 12% from 2020 while the number of homes available for sale is down 69%. The average home in Texas now costs over $200,000. You’ll want to clearly understand the difference between the market value and the assessed value of your home as that’s where your dreaded property taxes will come into play. In a nutshell, here’s what you need to know: 

Market Value

The market value is an estimated value of how much your home is worth in your current local market; hence, how much an active buyer would pay for your home. The market value, like the stock market, can be volatile as it is at the mercy of the overall economy and how popular the area is at the time. Home improvements also affect the value of a property. Your home’s market value is determined by the county appraiser’s mass appraisal method, which includes subjective formulas to determine market conditions. The amount a buyer is willing to pay vs. what the county says “a buyer should be willing to pay” can be confusing to homeowners as it doesn’t usually reflect the real market value. It is not uncommon for homeowners to file a protest with the county as this directly affects property taxes.

Assessed Value

The assessed value is part of the market value and is figured as a percentage of the market value of the property. Your county tax assessor determines your assessed value using a formula and set of procedures

based on the exemptions that you qualify for: Market Value “minus” exemptions “equals” Assessed Value. Typically, the assessed value of property is lower or equal to the appraised market value. Since the assessed value is used for calculating your property taxes, it is also based on state and county laws. It’s recommended that property owners learn to read their assessment notice and feel comfortable protesting if they see fit.

If you’re a Texas property owner in need of assistance with your property taxes, reach out to the professionals at Gill, Denson & Company. While our team cannot file exemptions on your behalf, we strive to point you in the right direction as you work with the appraisal district.