Market Value vs. Appraised Value: Why They Differ and Which One Matters More

You check your property tax bill. It says your house is worth $350,000.

You check Zillow. It says $420,000.

Then an appraiser walks through, takes some photos, and tells the bank it’s worth $395,000.

Three different numbers. One house.

If you are confused, you aren’t alone. One of the top questions we see from sellers is: "Why is my home value different from my appraisal cost?"

Here is the truth: A house doesn't have one price. It has three. And depending on whether you are selling, refinancing, or paying taxes, only one of them matters.

Let’s cut through the jargon and break down exactly what these numbers mean for your wallet.

1. Market Value: The "Emotional" Number

What it is:

Market Value is what a buyer is willing to write a check for today.

It is driven by emotion, competition, and inventory. If you have the only 3-bedroom house in a school district that everyone wants, your market value is going to skyrocket—regardless of what the data says.

Think of Market Value as the "Right Now" price. It moves fast. In a hot spring market, your market value could jump $20,000 in a single weekend just because two buyers got into a bidding war.

Who cares about it?

You (the seller) and the buyer. This is the number that goes on the big cardboard check at the closing table.

2. Appraised Value: The "Safety" Number

What it is:

Appraised Value is what the bank thinks your house is worth.

Unlike a buyer, the bank isn't emotional. They don't care about your cute breakfast nook or the way the morning light hits the kitchen. They care about risk.

An appraiser looks at the past. They pull data from similar homes ("comps") that sold in the last 3-6 months. Because they are looking in the rearview mirror, Appraised Value often lags behind Market Value.

• In a rising market: Appraised value is usually lower than the sales price (because the data hasn't caught up yet).

• In a falling market: Appraised value might be higher than what buyers are willing to pay.

Who cares about it?

The lender. If the appraisal comes in lower than the agreed price (an "Appraisal Gap"), the bank won't lend the full amount. This is why the "Appraised Value" is the deal-breaker number.

3. Assessed Value: The "Tax" Number

What it is:

This is the number the local government uses to send you a tax bill.

Here is the secret: Assessed Value is almost always lower than Market Value.

In fact, it’s often 80-90% of the true value. Why? Because tax assessors don't walk through your house. They use mass-data formulas based on your lot size, square footage, and exterior condition. They don't know you renovated the master bath.

Who cares about it?

The tax collector. (And you, when the bill arrives). Never use your tax assessment to price your home for sale. You will leave tens of thousands of dollars on the table.

The Breakdown: Which Number Wins?

Why The Gap Matters to You

The gap between these numbers causes real friction.

If you are a seller, you want the Market Value to be high (for profit) but the Assessed Value to be low (for lower taxes).

The problem starts when the Market Value beats the Appraised Value.

Let's say a buyer offers you $450,000 (Market Value). But the appraiser looks at the data and says, "Sorry, the last house on this street sold for $425,000. That’s all we can validate."

Now you have a $25,000 gap.

As we discussed in our Negotiation Playbook, this is where the deal gets sticky. The buyer typically has to cover that difference in cash, or you have to lower your price.

So, What Is Your Home Actually Worth?

If you are planning to sell in 2025, ignore your tax bill. And take the Zillow number with a grain of salt.

You need to know the Market Value—specifically, what buyers in your neighborhood are paying right now.

The best way to find that number isn't a guess. It’s data.

Stop guessing and start pricing with confidence.

See the real-time market value of your home and check the actual "sold" prices of your neighbors with our free valuation tool.

Check Your Home's Real Market Value Here