Assessed value vs market value: what's the real difference?

Last updated 2026-07-09

What is market value for a property?

Market value is the price a ready, willing, and informed buyer would pay a ready, willing seller, with neither under pressure to close. That's the standard definition used by appraisers, lenders, and most courts. It's not what you paid three years ago. It's not what Zillow says this morning (though that's a rough proxy). It's what comparable homes actually sold for in an arm's-length transaction recently.

Real estate agents estimate market value when they run a comparative market analysis. Licensed appraisers produce a formal opinion of market value for mortgage lenders. In both cases the methodology is similar: find two to five recent sales of similar homes nearby, adjust for differences like square footage, lot size, and condition, and land on a number.

Market value moves constantly. Interest rates rise, a new employer moves into town, a nearby school gets a bad rating. None of that automatically updates your tax assessment, which is the whole reason assessed value and market value can drift far apart over time ^[1].

What is assessed value and how is it calculated?

Assessed value is the dollar figure your county assessor assigns to your property for tax purposes. It is not an independent appraisal. It's a mass-appraisal exercise: one office estimates value for every taxable parcel in the county, often using automated models and periodic on-site reviews rather than full individual appraisals.

Most states then apply an assessment ratio, a percentage that converts estimated market value into assessed value. If your home has an estimated market value of $400,000 and your state uses a 50% assessment ratio, your assessed value is $200,000, and your tax bill is calculated on that $200,000 ^[2].

Assessment ratios vary enormously. California's Proposition 13 limits assessed value to the purchase price plus a maximum 2% annual increase until the property sells again, so a longtime owner's assessed value can be a small fraction of current market value ^[3]. In Georgia, residential property is assessed at 40% of fair market value by statute ^[4]. In Texas there is no fixed ratio in law, and the goal is 100% of market value, though studies repeatedly show homes are assessed above or below that target depending on price tier ^[5].

The key formula: Assessed Value × Mill Rate = Property Tax. The mill rate (or millage rate) is set by your local taxing authorities, so even if your assessed value is accurate, a change in the mill rate changes your bill.

What is the difference between assessed value and market value?

The difference is the assessment ratio, plus any caps, exemptions, and lag in the assessor's data. Market value is the real-world price your home commands. Assessed value is a government-determined fraction of that price, adjusted by law, policy, and sometimes just bureaucratic delay.

The table below shows how several states convert market value into assessed value.

State	Assessment Ratio	Basis
California	Varies (purchase price + up to 2%/yr)	Prop 13, Art. XIII A
Georgia	40% of FMV	O.C.G.A. § 48-5-7
Illinois (Cook Co.)	10% residential	35 ILCS 200/9-145
Arizona	10% of FMV (residential)	A.R.S. § 42-15002
Texas	100% of market value (goal)	Tax Code § 23.01
New York (varies by class)	~6% Class 1 (NYC)	NYC Admin. Code § 18-104
Colorado	6.765% residential (2023 to 2024)	C.R.S. § 39-1-104.2

The gap matters because it's the source of both legitimate savings and real overpayment. If the assessor overestimates your market value, you pay too much even before the ratio is applied. If the ratio itself is applied inconsistently across neighborhoods, lower-value homes in some jurisdictions carry a heavier burden than higher-value ones, a well-documented problem in assessment equity research ^[5].

One other point worth keeping straight: assessed value and appraised value are not the same thing either, though people often use them interchangeably. More on that below.

What is the difference between assessed value and appraised value?

"Appraised value" in everyday speech usually means the opinion of a licensed real estate appraiser hired by a lender before a mortgage closes. That number is as close to market value as a trained professional can get using verified comparable sales, a site visit, and USPAP-compliant methodology ^[6]. It's a formal, individualized estimate.

Assessed value is a mass-produced government estimate used only for taxation. The county assessor does not inspect your home every year. The assessor's office uses models, building permits, and sale prices from your neighborhood to estimate values for thousands of parcels at once. The two processes serve different masters: the appraiser answers to the lender and has to justify every adjustment; the assessor answers to the taxing authority and has to cover an entire county efficiently.

So when someone asks "what is the difference between appraised value and assessed value," the honest answer is: an appraisal is a professional, lender-driven opinion of market value; an assessment is a government estimate that feeds a tax formula and may be only a fraction of that appraised value depending on the state.

For appeal purposes, a licensed appraisal is one of the strongest pieces of evidence you can bring to a hearing. It's not free, typically $300 to $600 for a residential property ^[7], but if it shows the assessor overestimated market value, the savings over several years usually outweigh the cost.

Why does assessed value sometimes exceed market value?

It happens more often than assessors would like to admit, especially after markets drop fast. Assessors in most states reassess on a cycle: every one, two, or three years, or even longer. When home prices fall, assessed values from the last cycle can be higher than what you'd actually get if you sold the house today. During the 2008 to 2012 downturn, millions of homeowners were in exactly that spot.

It also happens when the assessor's model mislabels your property. A common example: the records show your house has a finished basement it doesn't have, or four bathrooms instead of three. Every extra feature the assessor thinks you have pushes the estimate up. Checking the property record card at your assessor's office is step one for any homeowner who suspects an overassessment ^[8].

And in states with no assessment ratio, like Texas, the stated goal is 100% of market value. If the assessor's model lags behind falling prices, assessed value can briefly exceed market value, which is grounds for a protest.

If assessed value exceeds market value, you can appeal. The appeal process varies by jurisdiction, but the core argument is simple: here is evidence (recent sales of comparable homes, or a licensed appraisal) showing the assessor's estimate is too high. Resources like the Maricopa County assessor's office and the Cook County Assessor publish their appeal procedures and deadlines online.

How does the assessment ratio affect your property tax bill?

Your tax bill is not calculated on market value. It's calculated on assessed value, which is usually market value multiplied by the assessment ratio, minus any exemptions you qualify for.

Here's a concrete example. Say your home's market value is $350,000 and you live in Georgia, where the assessment ratio is 40%.

Assessed value: $350,000 × 0.40 = $140,000

If you qualify for Georgia's $2,000 basic homestead exemption, the taxable value drops to $138,000 ^[4].

If your county's millage rate is 30 mills (0.030), your annual tax bill is $138,000 × 0.030 = $4,140.

Now suppose the assessor pegged your market value at $380,000 instead of $350,000. That's a $30,000 overestimate. After the ratio and exemption, your taxable value becomes $150,000, and your bill becomes $4,500. You're overpaying $360 a year. Over five years that's $1,800, assuming no reassessment.

That's why fighting an inflated market value estimate at the assessor level pays off. The assessment ratio doesn't protect you from an inflated starting number.

What is equalization and why does it matter?

Equalization is the process by which state governments try to make sure assessments are consistent across counties or taxing districts. If one county assesses at 60% of market value and another at 80%, property owners in the 80% county pay disproportionately more when state funding formulas use assessed values.

States publish an equalization factor (sometimes called a state multiplier) that adjusts all assessments in a given county up or down to hit the state's target ratio. In Illinois, the Illinois Department of Revenue publishes county equalization factors each year. Cook County has historically received a factor above 1.0, meaning assessed values are multiplied upward before the final tax calculation ^[9].

For homeowners, equalization is mostly background machinery. What matters is whether your individual assessed value accurately reflects your individual property's market value. But if you ever see an "equalized assessed value" (EAV) on your tax bill, that's the assessed value after the multiplier is applied, and it's the number used to calculate the final tax.

Does a higher market value always mean a higher tax bill?

Not automatically. The tax bill depends on assessed value, and assessed value depends on the assessment ratio, exemptions, and any caps your state has.

California's Proposition 13 is the clearest example. A homeowner who bought in 1995 for $250,000 has an assessed value today that can't legally exceed roughly $437,000 (using 2% annual increases for 30 years), even if the house would sell for $1.5 million now ^[3]. Their neighbor who bought last year pays taxes on $1.5 million. Same neighborhood, same physical house, wildly different bills.

Caps and exemptions exist in almost every state. Florida's Save Our Homes amendment limits assessment increases to 3% per year or the CPI change, whichever is lower, for homestead properties ^[10]. Georgia has a floating homestead exemption in some counties that freezes the taxable value entirely.

So rising market value matters most to new buyers and in states without caps. If you've owned your home for a long time in a capped state, your tax bill may sit far below what a new neighbor pays on an identical house.

How can you tell if your assessed value is wrong?

Start with the property record card. Every assessor maintains one for each parcel. It lists the characteristics the assessor used to model your value: square footage, lot size, year built, number of bedrooms and bathrooms, basement, garage, and so on. Request yours from the assessor's office or pull it from the assessor's website. Factual errors are common and straightforward to correct ^[8].

Next, check sales of comparable properties in your neighborhood from the last six to twelve months. Most assessors post recent sales data on their websites. You're looking for homes similar to yours (same size, age, condition, lot) that sold for less than what your assessor thinks your home is worth in market value terms. Two or three strong comparables that support a lower value are the backbone of a successful appeal.

If your state's assessment ratio is, say, 40%, convert the assessor's estimated market value back from assessed value (divide by 0.40) and compare that implied market value to the comparable sales you found. That's the number you're contesting.

Homework also means checking whether you're receiving all the exemptions you qualify for. A missing homestead exemption, senior exemption, or disability exemption could be costing you more than any overassessment. Local resources like the Gwinnett County Tax Assessor and Bexar County Tax Assessor post exemption applications and eligibility guides directly on their sites.

If the comparable sales and the record card both look fine but you still suspect overvaluation, that's when a licensed appraisal starts to make financial sense. The TaxFightBack DIY appeal kit walks through how to gather and present this evidence yourself, without paying a contingency firm 30 to 40% of your first-year savings.

What is the difference between assessed value and market value in specific high-tax states?

The mechanics play out differently depending on where you live, and knowing the local rules is the only way to judge your bill accurately.

Texas has no state income tax, which pushes property taxes high. The goal is 100% of market value, and Texas Tax Code § 23.01 says the appraised value of a property is its market value as of January 1 ^[12]. Protests go to an Appraisal Review Board, and roughly half of all protests result in some reduction according to the Texas Comptroller's annual reports ^[5]. Deadlines are tight: the general protest deadline is May 15 or 30 days after you receive your Notice of Appraised Value, whichever is later.

In Illinois (Cook County specifically), residential properties are assessed at 10% of market value under the Illinois Property Tax Code ^[9]. Then the Cook County Assessor applies the state equalization factor on top. The system is complicated, but the baseline point is that your bill is never calculated on full market value. See our guide to the Cook County assessor tax bill for the specific timeline and evidence rules.

Arizona assesses residential property at 10% of full cash value under A.R.S. § 42-15002 ^[11]. Full cash value is essentially market value. So on a $500,000 home, the assessed value is $50,000, and your tax rate applies to that $50,000. Maricopa County is the dominant jurisdiction; the Maricopa property tax article covers local appeal rules in detail.

California is its own world because of Proposition 13. For everyone who bought recently, assessed value is the purchase price, and it can only rise 2% per year. Reassessment to market value only triggers on a change in ownership or new construction. The Los Angeles County property tax and San Diego property tax guides cover the local procedures for each.

How do you appeal if your assessed value is too high relative to market value?

The process is similar across most states. You file a written appeal (sometimes called a protest, grievance, or petition) with either the assessor's office or an independent review board, by a deadline that's usually 30 to 90 days after assessment notices go out. Missing that deadline almost always means waiting a full year.

Your argument is that the assessor's estimate of market value is higher than actual market value. To make that argument stick, you need evidence: recent sales of comparable properties, a licensed appraisal, or both. Comparable sales are free and usually enough for a modestly overassessed home. An appraisal, at $300 to $600, adds weight when the overassessment is large or when the assessor pushes back.

At the hearing, keep it factual. State the assessor's market value estimate, state what the comparables show, and ask for a specific reduction. Boards are not moved by how much you love your house or how tight money is. They respond to sale prices.

After the hearing, if you're still not satisfied, most states allow a further appeal to a state tax court or circuit court. That level typically requires an attorney, so run the numbers before going that far.

Counties like Cherokee County, Lake County, Coweta County, and Madison County all publish their specific appeal windows and procedures on their assessor sites. Always verify the current deadline directly, because states occasionally move them by legislation.

How much can you save by correcting an overassessed value?

Nobody has clean national data on this, but the closest systematic evidence comes from jurisdiction-level studies. The University of Chicago's work on Cook County found that lower-value homes were assessed at higher effective rates relative to market value than higher-value homes, a pattern that held across multiple reassessment cycles ^[5]. The implication: homeowners who challenge assessments, especially owners of moderately priced homes, are more likely to be overassessed and have more to gain per dollar of effort.

At the individual level, the math depends on your assessed value overstatement and your mill rate. A $20,000 overstatement of market value in a state with a 40% assessment ratio and a 30-mill rate costs you $240 per year ($20,000 × 0.40 × 0.030). That's $1,200 over five years if the correction isn't made. The overstatement in the assessor's records doesn't fix itself. You have to initiate the appeal.

Contingency-fee appeal firms typically charge 25 to 40% of the first year's tax savings. On a $500 annual reduction, that's $125 to $200 gone before you see a dime. Doing it yourself with solid comparable sales data or a licensed appraisal costs you time and possibly an appraisal fee, but you keep the full reduction going forward. The TaxFightBack DIY appeal kit is built for exactly this scenario.

Frequently asked questions

What is the difference between assessed value and market value in simple terms?

Market value is what a buyer would pay for your home today. Assessed value is the number the government uses to calculate your property tax, and it's almost always lower than market value because states apply an assessment ratio, caps, or both. If your assessed value is $160,000 and your state uses a 40% ratio, the assessor thinks your home is worth $400,000 in the market.

What is the difference between appraised value and assessed value?

An appraised value is a licensed professional's opinion of market value, done for a lender or buyer using verified comparable sales and a property inspection. An assessed value is the government's mass-model estimate used only for property taxes. Appraisals are individualized; assessments cover thousands of parcels at once. For appeal purposes, a licensed appraisal carries more weight with a review board than a Zillow estimate.

Can assessed value be higher than market value?

Yes. It happens most often when home prices fall faster than the assessor's reassessment cycle. If your home would sell for $280,000 but the assessor's records still show a market value estimate of $310,000 based on a two-year-old model, you're paying taxes on a number above what the market would bear. That's a valid ground for appeal in every state.

Do I pay property taxes on market value or assessed value?

You pay on assessed value, not market value. Most states set assessed value as a fixed percentage of market value (the assessment ratio). Your bill is then: assessed value minus exemptions, multiplied by the local mill rate. The practical upshot is that even a large increase in market value only translates to a proportionally smaller increase in your tax bill when a sub-100% ratio applies.

How often does the assessor update assessed value?

It varies by state. Some counties reassess every year; others operate on two-year or four-year cycles. California only reassesses at market value when a property sells or undergoes new construction, because of Proposition 13. Between reassessments, assessed value may lag market value significantly, which can help longtime owners but can leave new buyers paying on a value that's already been corrected for neighbors.

What is an equalized assessed value?

Equalized assessed value (EAV) is the assessed value after your state applies a multiplier to bring all counties to the same target assessment ratio. Illinois is the clearest example: the Illinois Department of Revenue publishes an equalization factor for each county every year. Cook County's factor has historically been above 1.0, so it pushes assessed values up. EAV is the number actually used to compute your final tax bill in Illinois.

Does the assessment ratio vary by property type?

Yes, in many states. Commercial property is often assessed at a higher ratio than residential property. In Illinois, commercial property in Cook County is assessed at 25% of market value while residential is at 10%. New York City uses four separate assessment classes with different rules. If you own a rental property or commercial building, check the specific ratio for your property class before assuming your assessment is right.

How do I find my property's assessed value?

Check your annual property tax notice or bill, which lists it directly. You can also search your county assessor's website by address or parcel number; virtually every county now has a public-facing portal. The assessor's record will show both the estimated market value and the assessed value after the ratio is applied, along with any exemptions reducing your taxable value further.

Is appraised value the same as market value?

For practical purposes, a licensed appraisal is the closest you can get to a documented estimate of market value. The appraiser's job, under USPAP standards, is to estimate what the property would sell for in an arm's-length transaction on the effective date of the appraisal. It's not a guarantee of sale price, but it's the most defensible single estimate of market value you can produce for an appeal or a legal dispute.

What evidence do I need to prove my assessed value is higher than market value?

Two to four comparable sales of similar homes in your neighborhood from the last six to twelve months, showing a market value lower than the assessor's estimate, are usually enough. Adjust for size, age, and condition differences. A licensed appraisal is stronger but costs $300 to $600. Photos of condition problems (water damage, foundation cracks) help as supplemental evidence, especially if the assessor's record card shows no such deficiencies.

Does a low assessed value mean I underpaid for my home?

No. Assessed value and purchase price are separate numbers with separate purposes. A low assessed value just means your tax bill is low relative to market value. In states with assessment caps like California and Florida, longtime owners routinely have assessed values far below what they paid, and certainly far below what they could sell for today. The sale price and the assessed value are set by entirely different processes.

How long does it take to get an assessment corrected after a successful appeal?

Most corrections apply to the tax year in which you filed the appeal. Some states also allow retroactive corrections if the appeal was filed on time. The refund or credit typically arrives within 60 to 120 days of the board's decision, though that timeline varies by county. Future years are not automatically corrected; if the assessor's next model still overestimates, you may need to appeal again.

Can a higher sale price increase my neighbor's assessed value?

In most states, your sale triggers a reassessment of your own property to the sale price, but not your neighbor's. Your neighbor benefits from your high sale price only indirectly: the assessor may use your sale as a comparable when running the next mass reassessment model for the neighborhood. California is strict: neighbors' values only reset on their own sales, full stop, because Proposition 13 ties assessed value to each property's individual purchase price.

Sources

1. International Association of Assessing Officers (IAAO), Standard on Mass Appraisal of Real Property: Market value is the price a ready, willing, and informed buyer would pay a ready, willing seller in an arm's-length transaction; assessment lags real-world value changes between reassessment cycles.
2. Lincoln Institute of Land Policy, Significant Features of the Property Tax: Most states apply an assessment ratio that converts estimated market value into the assessed value used for tax calculation.
3. California State Board of Equalization, Proposition 13 Overview: California's Proposition 13 limits annual increases in assessed value to the rate of inflation or 2%, whichever is lower, with reassessment to market value only upon change in ownership or new construction.
4. Georgia Department of Revenue, Property Tax Overview (O.C.G.A. § 48-5-7): Georgia residential property is assessed at 40% of fair market value by statute; the basic homestead exemption reduces the assessed value by $2,000.
5. Avenancio-Leon, C. and Howard, T., 'The Assessment Gap: Racial Inequalities in Property Taxation', Quarterly Journal of Economics, 2022: Studies of Cook County and other jurisdictions show lower-value homes are systematically assessed at higher effective rates relative to market value than higher-value homes; roughly half of Texas protests result in some reduction per the Texas Comptroller's reports.
6. The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice (USPAP): Licensed appraisers must follow USPAP methodology, including verified comparable sales and a property inspection, to produce a defensible opinion of market value.
7. National Association of Realtors, Real Estate Appraisal FAQ: A standard residential appraisal typically costs $300 to $600 depending on property size and market.
8. National Taxpayers Union Foundation, Guide to Challenging Your Property Tax Assessment: Factual errors on property record cards (wrong square footage, extra bathrooms, nonexistent features) are a common source of overassessment; checking the card is the recommended first step.
9. Illinois Department of Revenue, Property Tax System Overview (35 ILCS 200/9-145): Residential property in Cook County is assessed at 10% of estimated market value under Illinois law; the state publishes equalization factors annually to adjust county assessed values to the state target ratio.
10. Florida Department of Revenue, Save Our Homes Amendment Overview: Florida's Save Our Homes amendment limits annual assessment increases for homestead property to 3% or the CPI change, whichever is lower.
11. Arizona Department of Revenue, Property Tax Overview (A.R.S. § 42-15002): Arizona assesses residential property at 10% of full cash value, which is defined as market value, under A.R.S. § 42-15002.
12. Texas Comptroller of Public Accounts, Property Tax Basics (Texas Tax Code § 23.01): Texas Tax Code § 23.01 sets appraised value at market value as of January 1; the general protest deadline is May 15 or 30 days after notice, whichever is later.
13. Colorado Department of Local Affairs, Residential Assessment Rate History (C.R.S. § 39-1-104.2): Colorado set the residential assessment rate at 6.765% of actual value for the 2023-2024 assessment years under C.R.S. § 39-1-104.2.