Can a Home Be Bought for Less Than Its Assessed Value?

A home that needs repair often sells for less than market value.

A home that needs repair often sells for less than market value.

Buyers and sellers work for their mutual benefit in the home real estate market. The seller wants to make a profit off the home, while the buyer is looking for the right price on a home she wants. A home has three different real estate values -- appraised, market and assessed -- and may sell for more or less than any or all.


Market value is generally what the home is expected to sell for in its current condition in a reasonable period of time. Appraised value is partly based on market value, but is more specific to the home. A licensed appraiser visits the property and uses market value information plus other information, such as the home's faults, to set the appraised value. An assessed value is that on which property taxes are based. The local government tax assessor sets the value based on an approved formula, which usually varies by area.


An assessed value usually doesn't impact home buying. The market and appraised values are more crucial to the price. The formulas that assessors use to determine the assessed value often include other factors, such as depreciation, that don't come into play when you're negotiating with the seller. For example, an assessor may set rates in a neighborhood at 90 percent of market value. You might buy a home in that neighborhood for under the assessed value if it needs repairs and is worth under 90 percent of the going market values.


Local governments allow a homeowner to challenge an assessed value. For example, in New York City, a homeowner can appeal the assessed value to the New York City Tax Commission. If she proves her case, the city will lower the assessed value. The procedures and requirements for an appeal of assessed value vary by location and the basis for the challenge. The homeowner is usually the party who is required to prove why the assessment is incorrect. For example, if the homeowner believes the market value part of her assessment is too high, she'll need to document recent sales in the area for comparable homes to establish a market value.

Tax Considerations

Although the assessed value may not come into price negotiations, it does determine the home's property taxes. The area tax rate is applied to the assessed value for the home. You should review the assessed values over the last few years and note any trends, as increases mean higher taxes. Once you buy the home, you'll be responsible for the property taxes, since the expense is part of the overall cost of owning a property.

Video of the Day

Brought to you by Sapling
Brought to you by Sapling

About the Author

Anna Assad began writing professionally in 1999 and has published several legal articles for various websites. She has an extensive real estate and criminal legal background. She also tutored in English for nearly eight years, attended Buffalo State College for paralegal studies and accounting, and minored in English literature, receiving a Bachelor of Arts.

Photo Credits

  • Jupiterimages/liquidlibrary/Getty Images