As you begin the process of downsizing, you definitely want to avoid this happening to you.
MARKET VALUE, APPRAISAL VALUE, AND ASSESSED VALUE
When working with your real estate agent to set the right price for your home, it’s important to know the difference between the three terms listed above. If you can understand the basics of what these mean and how they differ, you can work better with your agent. Market Value: Refers to the “probable” price that a home should sell for within an open, competitive market under fair sale conditions. In other words, it’s what your home should be able to sell for within the constraints of its local market and neighborhood. What would other comparable homes sell for at this time and in this market? Appraisal Value: Refers to the amounts “contained in an appraisal report for a specific property” (www.accountingcoach.com). It’s the value given to a home after a professional appraiser has conducted a thorough evaluation of the home and its worth. The appraiser will look at various aspects of the property’s features, including “size, type of construction, location, condition, and recent sales of comparable property in the vicinity.” The appraisal value is especially important in determining how much money could be borrowed (by the buyer), and under what terms and conditions. Example: “Appraised values are useful because a company’s balance sheet will report its land and buildings at their acquired cost and will report the accumulated depreciation of the buildings. (Land is not depreciated.) Therefore, if the company wants to refinance its real estate, a current appraisal will usually be required.” (www.accountingcoach.com)
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