The discussions surrounding the question of “what’s a home worth” will never end, because there is no standard answer. Sure the reflex text book answer is “what a buyer is willing to pay” but that’s hardly the complete picture. A home has a number of “values” and most are not tied to the buyers in the market. There is a best answer of course, it also happens to be the simplest one. Spoiler’s not what it sells for. This short clip provides a common sense overview, below that we get more into the weeds.

Purchase Price

The purchase price is the amount the buyer agrees to pay the seller; this tends to support the “it’s worth what a buyer will pay” idea. Does it? Consider:

  • The costs of selling – commissions, repairs, closing costs, etc – are included in the recorded purchase price.
  • Conditions of the sale are subject to untold variables – economy, location, condition, inventory, local market, concessions, commissions, time of sale…different day, different price.

Market Value

Market value anticipates the “a home should sell for” question. How reliable is it? Consider:

  • Who prepared the report? Is it unbiased? NO. Did a real estate prep it? Their objective is to get listings, how likely are they to be unbiased?
  • Discount and iBuyer companies are listing homes; a major one flamed out, how credible are these opinions?
  • Variables are significant – date, market conditions, inventory, economy, etc.

Appraised Value  

This will vary depending on the purpose of the appraisal. There are a number of reasons appraisals are completed, purchase appraisals for buyers the most common. Consider:

  • Purchase appraisals represents the lender’s interest only
  • Appraisers must follow strict underwriting guidelines
  • These are snapshot in time, sales are up to a year back with consideration to the current market

Assessed Value

Assessed value is the dollar value assigned to a home or other piece of property for tax purposes. It is often a percentage of fair market value.

  • In Georgia property is required to be assessed at 40% of the fair market value unless otherwise specified by law.
  • Assessed value of a home is often based on the market value, the appraised value, or a uniform percentage of the two. Assessors work to determine these values in their jurisdiction.
  • “Welcome stranger” happens when the recorded sale price changes the assessment. Additions and improvements will also raise it.
  • Assessments be challenged; homestead and senior exemptions may exists

Value in Use

Consider the literal “value in use”; not the nerd text book definition. Simply put; “how well does the home suit the occupant’s requirements?” A resident in a home that serves a special need(s) has a value that isn’t often measured monetarily. But that special feature(s) fills a specific requirement or desire that adds appeal and utility for the occupant.

  • Value to the occupant is derived from that special characteristic(s) the home brings to the occupant. Having elderly parents in the home, being close to a train station, walkability….
  • Often an intangible – location, design, style, characteristic, feature…something that is a significant positive to the occupant. Something that the market may not clearly recognize in monetary terms.

Ultimately, value is derived from how well a home works for the owner/buyer, this is the single most important factor. Every person and every home is different, circumstances change and markets are fluid. The one constant is change and that is intrinsic in every facet of real estate. A home that provides an owner with that "special something" is one that is worth much more than what the data shows at any given time.

For all the pencil necked geeks out here, yes, I know the text book definition of the above terms is different than what's written. Call the principal and narc on me. What we learn behind a desk matters but how we use it in the field and relate it to the public matters most.

The Hank Miller Team puts 30+ years of full time sales & appraisal experience to work for you. Act with complete confidence & make sound, decisive real estate decisions. 678-428-8276 and

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