Assessed Value, Appraised Value and Market Value: What Peoria Sellers Need to Know

If you've started thinking about selling, you've probably run into several numbers that each claim to say what your home is worth. Your property tax bill shows one. An appraisal from a refinance shows another. A website shows a third. It's confusing, and that confusion can lead sellers to price from the wrong number.

I'm Shannan Werckle, a Broker-REALTOR® with eXp Realty and the name behind Greater Peoria Living. Here's the short version of assessed value vs. market value in Peoria, with appraised value in between: three different numbers, set by different people, for different reasons. Only one of them decides what your home will sell for.

Assessed value is the number your local assessor assigns to calculate property taxes. In Illinois it's set by the township assessor, typically as a fraction of what the assessor estimates the property is worth, so it often looks low next to what homes actually sell for. That's by design.

• It's updated on a schedule, not in real time, so it can lag behind the market.
• It's based on methods applied to many properties at once. Nobody came inside to see your new kitchen or roof.
• You can appeal it if you believe it's wrong, but that's a separate process from pricing a sale.

Your assessed value does matter for your tax bill, and so do exemptions. Many homeowners qualify for property tax exemptions they've never applied for, and that can make a real difference whether you're staying, selling or buying next. I'll point you to the ones worth asking about. Amounts and rules can change, so always confirm with your county assessor.

An appraisal is a licensed appraiser's opinion of value. Unlike the assessor, the appraiser visits the home, notes its condition and features, and compares it with recent sales nearby.

If you refinanced in the last few years, you may have an appraisal in a folder somewhere. It was accurate on the day it was done. It isn't a guide to today's price, because the market has moved since.

Appraisals matter most after you accept an offer. If your buyer is financing, the lender orders a new appraisal. If it comes in at or above the price, the sale moves forward. If it comes in below, the gap has to be negotiated. That's one more reason pricing in line with recent sales matters from the start. My post on why the highest offer isn't always the best includes a real example of an appraisal gap.

Market value is what a willing, informed buyer will pay for your home on the open market right now. It comes from real, closed sales of similar homes nearby, adjusted for the differences: location, condition, updates, size, lot and the rest. That's the number your list price should be built around, and it's what a comparative market analysis is for. See why online estimates miss for how that analysis works.

Buyers get excited when they see a home with low property taxes, in any market. I always coach my buyer clients to look closer, because low taxes on a listing may not last after you buy it.

When a home has been owned for years or decades, its assessed value may not reflect today's market, because it hasn't sold in a long time. Once it sells, the assessment can catch up to the price you paid. In our area, the assessed value generally works out to about one third of the market or purchase price, and in my experience local tax rates have generally run from about 7% to as high as 10% of that, depending on where the home is.

Here's a simple example. On a $300,000 home, one third is $100,000. At a rate of 8%, that's about $8,000 a year in property taxes. At 10%, it's about $10,000. That's why I pay attention to what you're paying for a home, not only to what the current owner pays in taxes.

Exemptions lower the assessed value your taxes are figured on, and many homeowners never apply for the ones they qualify for:

• General homestead exemption: up to $6,000 off the assessed value when you live in the home.
• Senior citizens homestead exemption: $5,000 off the assessed value for homeowners 65 or older.
• Senior assessment freeze: for qualifying homeowners 65 or older under an income limit, it holds the assessed value at a base year. The tax rate can still change.
• Veterans with service-connected disabilities: a reduction that grows with the disability rating, up to eliminating most or all of the tax at 70% or more. An unmarried surviving spouse of a veteran who received it can generally keep it.

Amounts, income limits and rules change, and each exemption has its own application. Always confirm with your county assessor.

• Setting your list price: market value, from recent sales. Not your assessment, and not an old appraisal.
• Your property tax bill: assessed value, plus any exemptions you qualify for.
• After you accept a financed offer: the buyer's appraisal, which needs to support the contract price.
• Online estimates: a rough starting point at most.

It's normal for these numbers to differ. Trouble starts only when one is used for a job it wasn't built to do.

If you're thinking about selling in Peoria or nearby, I'm happy to put together a current market analysis from real sales, and to look at your property taxes and any exemptions while we're at it. No pressure and no obligation. Start with your home's value or get in touch here.