Value means different things to different people, depending on how they are involved in a real estate transaction. The Buyer may have stars in their eyes and see "the castle of their dreams" when they look at the property they are purchasing.
Assessed Value
The tax assessor will see a very different picture. The assessor wants to create value equality among the town or city's citizens in order to fairly assess taxes and share the tax burden in an equitable manner amongst all property owners. Towns periodically undertake re-evaluations to update their assessed market valuations for all property. While based upon historical sales data, it does not always represent current market data. It is a useful tool in comparing the values of similar properties. In Hawaii, assessed values rarely keep pace with market values.
Appraised Value
Appraisers must protect the interest of the lender and therefore must be more conservative in the value they place on a property. The appraised value is more typically based upon historic sales data and may or may not agree with market value. In Hawaii, appraisers generally take 3 recent closed sales in the same neighborhood that are similar or comparable in size and condition to the property being appraised.
Market Value
Market value is what a ready, willing, and able buyer pays to a ready, willing and able seller in a transaction with no undue influences. It is a negotiated value which changes relative to market conditions, supply of homes, demand, and seasonality in some cases. Market value is created by the buyer and seller. Too often, buyers and sellers have a notion some other factor determines market value, when in reality, those two parties determine market value.
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