Three Values, One House… and a Whole Lotta Confusion

You know what’s always fun? Explaining how one single house can have three totally different values depending on who you ask. It’s like real estate’s version of a choose-your-own-adventure story with a splash of eye-rolls and calculator punching thrown in for good measure.

So let’s talk about the big three: Assessed value, Appraised value, and Buyer value, because yes, they’re all different, and no, you’re not the only one confused.

Assessed Value

Let’s start with assessed value…aka the number that makes your property taxes go up.

This gem is decided by the county assessor, who may or may not have set foot in your home since flip phones were still cool.

It’s basically what the county thinks your home is worth for tax purposes, based on an algorithm and a whole lot of data crunching. It’s not necessarily what your home would sell for—it’s just what your tax bill is based on. Fun, right?

Appraised Value

Now onto the appraised value—the one that matters to your buyer’s lender.

Appraisers are a neutral third party hired by the buyer’s lender to make sure they’re not loaning $375K for a house that’s only worth $320K. Lenders will only loan money based on the appraised value.

They look at recent comparable sales (usually within 6 months), size of the home, the lot, condition of the home, updates, location… you know, actual facts. But even this number isn’t a magical truth.

Appraisals are still opinions. Educated opinions, yes. But opinions nonetheless. And they’re ever changing as the comps age out or new comparable properties are sold.

And nothing adds spice to a transaction like an appraisal coming in low. (“What do you mean it didn’t appraise?!” is what REALTOR nightmares are made of. 😬

Buyer Value

And then there’s buyer value—which is where things get really interesting.

Buyer value is what someone is actually willing to pay for your home, right now, based on emotion, motivation, available inventory and sometimes questionable Pinterest boards.

It’s the “I don’t care that it doesn’t have a finished basement, it’s in my dream neighborhood and I’m sick of losing out” value. It’s also where the weird neighbor with 87 lawn ornaments and the 4 formal living rooms can come into play.

This is the real magic number—and it doesn’t always match the other two. Especially in Central Iowa, where one buyer’s “dated” is another buyer’s “charmingly vintage,” and acreage buyers? Don’t even get me started. Throw in a heated shop or a mature windbreak, and it changes the “buyer value” game completely.

Or there’s that amazing acreage that had an assessed value of $476,000, appraised at $545,000 but we had to keep reducing the price til we got an offer and accepted $460,000. The house was spotless and physically solid, but the mechanicals and 2,700 sq foot interior were vintage early 80s.

So what’s your home really worth?

Well… all three. And none of them at the same time.

I tell my clients: the assessed value is for the county, the appraised value is for the bank, and the buyer value? That’s where I come in - to help you figure out what someone out there is willing to pay based on the current market, your property’s uniqueness and a whole lot of experience.

And yes, I will politely ignore that Zestimate that so many sellers love because Zillow likely used an apartment building and a 80 acre farm as comps for your 2 bed, 1 bath on a small lot… sorry, not sorry.

By Brandi Nelson, your friendly, slightly sarcastic, Central Iowa REALTOR® who still lives her job!