When it comes to real estate, understanding the different types of property values is essential for buyers, sellers, investors and professionals alike. Each value type serves a different purpose and is determined using different methods.
Market Value
Market value is the most commonly referenced type of property value. It represents the price a property would sell for on the open market under normal conditions, where both buyer and seller are acting freely and with full knowledge of the property. The comparable sales method is the most widely used approach for determining market value.
Assessed Value
The assessed value is determined by a government assessor for the purpose of calculating property taxes. This value may differ significantly from the market value and is typically updated periodically. Assessed values are often lower than market values.
Insured Value
The insured value is the amount for which a property is covered by an insurance policy. It typically reflects the cost of rebuilding the structure and may not include the land value. Insured value focuses on replacement cost rather than market value.
Factors That Change Property Values
Property values are not static. They change based on market conditions, neighbourhood development, infrastructure improvements, economic trends, and the physical condition of the property itself. Regular valuations help property owners understand their asset's current worth.
