What’s the difference between market value and appraised value?
Market Value vs Appraised Value — Which One Sets the Real Price of Your Home?
Quick answer
Market value is what a buyer will likely pay in today’s market. Appraised value is a professional’s estimate, typically used by lenders. They often match — but not always. Know the difference and you control the deal.
What market value means
- Market value (fair market value) is driven by supply, demand, and recent comparable sales. It reflects real buyer behavior: what people are willing to pay right now.
- Influences: comparable sales (comps), local inventory, interest rates, seasonality, and buyer sentiment.
What appraised value means
- Appraised value is a formal valuation done by a licensed appraiser. Lenders use it to decide how much they’ll lend.
- Methods: comparable sales, cost approach, and income approach (for investment properties).
- Appraisers follow standards and data. They don’t set the market; they report it.
Key differences (fast read)
- Purpose: Market value helps price and sell. Appraisal protects lenders and verifies value for financing.
- Authority: Market value is crowd-driven. Appraisal is expert-driven.
- Timing: Market value can move daily. Appraisal is a fixed snapshot.
- Outcome: A sale can close above or below an appraisal. An appraisal can stall financing.
Real-world example
A house lists at $900,000 based on current comps (market value). An appraiser inspects and finds limited recent sales — appraised value comes in at $870,000. Buyer’s lender bases the mortgage on $870,000. If buyer and seller can’t bridge the $30,000 gap, the deal can fail unless the buyer covers the difference or the seller lowers the price.
Why this matters to buyers and sellers
- Sellers: Pricing at market value gets more buyers and faster offers. Overpricing invites appraisal gaps and longer time on market.
- Buyers: An appraisal below the offer puts you on the hook to increase down payment or renegotiate. Know your financing contingency.
How to avoid appraisal surprises
- Use a local market expert to produce a Comparative Market Analysis (CMA).
- Share recent, similar closed sales with the appraiser before inspection.
- Make low-cost, high-impact repairs and document upgrades.
Why this guidance matters
Understand both values so you make the right call quickly. Price to attract buyers. Prepare for the appraisal to protect financing. That’s how deals close on time.
Ready to get it right? Talk to the local market expert who uses CMA data, appraisal prep, and negotiation tactics to close gaps and get top offers. Contact Tony Sousa, Local Realtor: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
