One of my friends recently asked me what the difference between market value and assessed value on a house, so I decided to write a blog explaining the process of finding the assessed value, and some other valuable terms such as market value, book value, appraised value, and assessed value.
Book Value- The book value never fluctuates like the others, because it is how much you paid for your house.
Market Value – How much your house is worth, or how much you could sell it on the market currently. The market value fluctuates with the economy, and currently, most houses’ market value dropped, leaving people owe more money based on their book value than its worth.
Appraised Value - Appraisals are third parties who calculate your homes approximate value based on the lot size, square footage of the house, the number of bedrooms and bathrooms…etc. Appraised value isn’t necessarily consistent with the market value, because appraisals don’t consider the condition of the house, a very important aspect of trying to resale your house, don’t you think?
Assessed Value – The assessed value is only a percentage of your homes appraised value which determines how much your property taxes are. Your entire houses’ equity isn’t taxed, only a percentage. in Missouri, it’s a 30% assessment rate, so if your house is worth 100K, your assessed value would be 30K, which they tax using a mill rate.
Mill Rate - The rate that is taxed from the assessed value of your home which determines your property tax. The mill rate isn’t expressed is hundredths, like a normal percentage, but is in thousandth’s, or 1/1000 of a dollar. so if they want to tax $50 for every 1000 of your assessed value, then your mill rate would be 50 mills (when in fact its the same as saying its a 5% tax rate) (50/1000 = 5/100, or 5%)
I hope this was helpful. If you have any questions about this, or would like a free consultation to find out your home’s value, contact me, and I would glad to help!