Assessed value VS appraised value VS CMS VS AVM - understanding valuation metrics

What’s the difference between assessed value, appraised value, comparative market analysis and automated valuation models?

What is your home worth? That depends on who is valuing it and for what purpose. Although people sometimes use these different valuation terms interchangeably, they all serve different functions and it’s important to understand what they each mean.

Assessed value: This is the value given to your property by your local government. It is designed to be a relative value and when done correctly similar homes in your neighborhood will have similar assessed values. Assessors generally do not see inside your home or take into account renovations, age of mechanicals, etc. The assessed value is used to determine your property and school taxes. Municipalities conduct reassessments every 6-10 years so if you are depending on when the last assessment was completed, this valuation may not line up with other valuation methods.

Appraised value: This value is determined by a professional home appraiser, generally hired by a lender to assist them in the mortgage application process. Appraisers will enter the property and conduct a brief tour. Appraisers use calculations based on recent sales of comparable homes to determine the appraised value of a property.

Comparative market analysis/ real estate comps: This valuation is completed by a real estate professional and takes into account recent market activity for similar homes as well as current competition. Real estate professionals will walk through the home and will consider the property’s assets and limitations and how they compare to other recently sold houses. A thorough market analysis will factor in knowledge of what the current pool of buyers are looking for in a home.

Automated valuation models: These are the computer algorithms employed by large real estate platforms. While these systems may be more efficient and are able to quickly value a large number of properties, they are less precise than those valuations completed by a human being with knowledge of the local real estate market.

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