Real Estate Book: Question for Chapter 4-How Much Is Your Home Really Worth?

Q: I have been reading a lot about property values and now I am confused. What is the difference between market value and appraised value?

A: Market value and appraised value can often be the same, as well as just as often be different.
Appraised value usually puts the most weight on past history of real estate sales.
Market value can differ as real estate market dynamics can quickly change course making past sold values irrelevant.
In a rising market, I will put a lot of weight on recent pending sales (properties in escrow waiting to close) in addition to the supply and demand ratio of available homes for sale compared to the volume of recent pending sales activity.
In a declining market, yesterday’s sold property values are usually higher than what a property is worth today.
I usually put a lot of weight on the value of competing homes for sale in addition to the supply and demand ratio and lengthening marketing time to sell a property.