Since a lot of your
net worth
is probably invested in your home, it’s important to keep an eye on its value.
The value of your home, or any property, is set in several ways:
Market
value
is the price you pay when you buy
a home. It’s what the market will bear.
A house built in a certain style, or in a prestigious
neighborhood, will often command a higher price.
And a house in a booming area may sell for tens
of thousands of dollars more than essentially
the same house in a depressed or less desirable
location.
Appraised
value
(sometimes called
fair
market value) is what a real estate appraiser
says your house is worth. The appraisal is based
on the selling price of similar homes in the
area, as well as subjective judgment. So two
appraisers may value the same house differently.
Assessed value
is assigned by the local tax assessor and is the
basis for your real estate taxes. There can be a
large difference between assessed and appraised value,
depending on how recently the assessment was done
and the standards used in your community.
When
high value works against you
You’ll probably have your home reassessed if you remodel. And some local governments reassess all properties from time to time. If you consider the tax assessor’s total too high, you can appeal on grievance day — the designated day of the year your town's assessor will hear your complaint. Be prepared to show the assessments of comparable properties and to point out shortcomings the assessor might have overlooked, which could reduce your home’s value.
