Assessed Value vs. Market Value: What’s the Difference?

The assessed value on your tax bill is often nowhere near what a home lists for or sells for. That leads to a common question from buyers and sellers: what does assessed value actually mean, and does it affect a sale?

What Is Assessed Value?

Assessed value is the dollar value your town assigns to a home for property tax purposes. Each year, the town’s assessors review recent home sales and apply their own valuation model to set values for every property. In Massachusetts, those values are based on market conditions as of a date that’s already in the past by the time you see your bill, so they often run a year or more behind the market.

The town then applies its tax rate, set per $1,000 of value and different in every town, to calculate your tax bill. That money pays for schools, police, fire and other town services.

What Is Market Value?

Market value is what a buyer is willing to pay for a home today. It’s based on recent sales of similar homes nearby, the home’s condition and features, and current supply and demand. It’s what drives asking prices, offers and bank appraisals.

Does Assessed Value Affect a Home Sale?

Not the price. Assessed value doesn’t set market value, it isn’t used by appraisers, and it isn’t used to set an asking price. Those are all based on recent comparable sales.

When the market is rising, assessed values tend to lag behind what homes are actually selling for. When the market cools, assessments can end up above what homes would sell for. Because each town uses its own model and older data, the gap can go either way.

Where It Does Matter: Your Tax Bill

Assessed value doesn’t change what a home is worth, but it does determine the property taxes you’ll pay. For buyers, that’s part of your monthly cost, so it’s worth checking the current tax bill on any home you’re considering.

If you think your home’s assessment is too high, Massachusetts homeowners can apply to the town’s assessors for an abatement. The filing window is short and usually opens once the third-quarter tax bill comes out, so check your town’s deadline.

Have questions about what a home is really worth? We’re happy to run the numbers for you.

Ron Carpenito
978-494-0346

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