What is appraised value?
Appraised value is a property’s market value, as determined by a licensed, objective real estate appraiser. The appraiser considers multiple factors, including the structure and property itself, plus nearby listings or recent sales. While it may show some indication of what buyers may be willing to pay for your property with the current market conditions, lenders use this information only as part of the mortgage approval process.
Bank appraisals
A bank appraisal specifically refers to an appraisal ordered by your mortgage lender. The lender uses this information to determine the value of the property you’re buying, and the information plays a role in the amount the lender is willing to lend.
An appraisal serves as a safeguard for the lender, ensuring it doesn’t extend a loan for more than a property is worth. The mortgage lender typically orders the appraisal either through an appraisal management company or directly with an appraiser, but the borrower covers the cost of the appraisal.
Tax assessments
Tax assessments are another form of evaluating property value, but the tax assessor of the county the property is located in assesses the value.
This number will likely be different from the appraised or market value. This is because tax assessors also look at any permits filed for home improvements to the property, plus recent sales in the area. The assessor then uses the data from the assessment to solidify the property tax.
» MORE: 5 ways to determine house value
What is market value?
Market value is how much your property would sell for when placed on the market. Buyers determine this value, and the home’s appraised value or tax assessment value has no bearing on what buyers are willing to pay in an open market.
Real estate professionals use market value as a strategy for setting a property’s listing price.
You won’t find an exact formula for calculating market value, but there are some data points that may provide an estimate. You can consider comparable sales near the property or the cost of replacing the home with today’s construction costs if there aren’t any local comparable sales available.
Factors that affect appraisal value vs. market value
Different factors affect a home’s appraised value versus its market value.
Appraised value
Appraisers include multiple data points that determine the property’s appraisal value. They use a wide range of factors, which you may or may not have any control over. Evaluations often include:
- Structure: An appraiser looks at the building style, number of floors, number of rooms, square footage, home size and any structural items that may cause appreciation or depreciation.
- Neighborhood comparables: Neighborhood comparables, or recent property sales near the property, are another consideration. The appraiser will note any shared physical or functional features.
- Home improvements: This focuses on home updates, unique features or amenities added.
- Home age: Older homes that have a lot of wear and tear tend to reduce appraised value.
Market value
Generally, homebuyers and current market conditions determine market value. Some factors that affect market value include:
- Economic conditions: Inflation and the health of the overall housing market can affect market value.
- Home availability: Home value will generally increase if there are fewer homes available.
- Location: A home’s location, such as if it’s in a desirable neighborhood or a good school district, will affect its value.
- Comparable sales: The selling price for nearby homes can affect the selling price of your home.
» WHAT'S THE DIFFERENCE?: Buyer's market vs. seller's market
FAQ
Can you trust real estate sites for a home’s appraisal value?
You can use an online real estate site for a home appraisal as a guide or estimate, but these sites are generally intended as a guide or starting point only. Ultimately, you should rely on information provided by a real estate professional’s analysis.
How can you increase a home’s appraised value?
You may be able to increase your home’s appraised value by making improvements to your home, including the interior, exterior and landscaping. You can provide an appraiser with the information regarding any improvements you’ve made when they come to your property for the appraisal.
Is market value usually higher than appraised value?
Whether market value is higher than appraised value depends on the current homebuying market when your property’s listed. If buyers show little interest in your home at the current sale price, then it may indicate the market value is lower than the appraised value. However, if there’s intense interest in your home and multiple offers, the market value is likely higher than the appraised value.
Can you sell a home over the appraised value?
Yes, you can sell a home over the appraised value because appraised value doesn’t have to match market value. However, a lender will only lend to a borrower based on the appraised value.
How much over market value should you pay for a house?
How much you should pay over market value for a house generally depends on factors like comparable sales in your neighborhood and current housing demand. Real estate professionals generally recommend offering 1% to 3% over a home’s asking price if there’s a lot of demand for a home.
Bottom line
Understanding the difference between appraisal value and market value can help you as you navigate the homebuying, selling or refinancing process. Generally, you can improve your home’s appraisal or market value by maintaining your home and making home improvements.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Consumer Financial Protection Bureau, "Why Did I Receive Different Valuations During the Mortgage Loan Application Process?" Accessed Feb. 6, 2026.
