BLOG 2: Money & Your Home

Your home's market value, tax assessment, and equity are three different numbers. Understanding what each one means can help you make better decisions as a homeowner.

Home Value, Tax Assessment and Equity: What’s the Difference?

Homeowners hear a lot of numbers attached to their property.

Your home's estimated value may show one number. Your tax records may show another. Your mortgage statement shows something completely different.

So which number actually matters?

The answer depends on what you are trying to understand.

Market Value

Your home's market value is an estimate of what a buyer may reasonably be willing to pay for the property under current market conditions.

It can be influenced by factors such as recent comparable sales, condition, updates, location, property features, supply, and buyer demand.

Online estimates can provide a starting point, but they do not always account for everything that makes one property different from another.

Tax Assessment

Your tax assessment exists primarily for property tax purposes.

It should not automatically be treated as your home's current market value. Assessment systems and methods can vary depending on the county and municipality where the property is located.

This is why seeing an assessed value that is significantly different from an estimated selling price is not necessarily unusual.

Home Equity

Your equity is essentially the portion of the property you own financially.

A simple starting estimate is:

Current Home Value - Outstanding Loan Balances = Approximate Home Equity

For example, if a home could sell for approximately $350,000 and there is $220,000 remaining on the mortgage, the homeowner would have roughly $130,000 in equity before considering selling expenses or other liens.

Equity can change as you pay down your mortgage and as the property's market value changes.

Why Knowing the Difference Matters

You may not be thinking about selling anytime soon, but understanding these numbers can still be useful.

Knowing your home's approximate value and equity can help when you are considering renovations, financial planning, refinancing discussions, purchasing another property, or simply understanding where you stand as a homeowner.

The important part is making sure you are comparing the right numbers.

Curious what your home may be worth in today's market? Get a current home value estimate.