What Is Market Value?

The price a property would likely sell for on the open market, typically determined by comparable recent sales.

Detailed Explanation

Market value, sometimes called fair market value (FMV), is the price a willing buyer would pay a willing seller, with both parties having reasonable knowledge of the relevant facts and neither being under pressure to act. This is the standard nearly every state uses as the starting point for property tax assessments. County assessors estimate market value using three approaches: the sales comparison approach (looking at what similar nearby properties sold for), the cost approach (estimating what it would cost to rebuild the structure plus the land value), and the income approach (used primarily for commercial and rental properties). For residential properties, the sales comparison approach is almost always the most relevant. When you appeal, you are essentially arguing that the county's estimate of your home's market value is wrong. The strongest evidence is recent sales of comparable properties that are similar in size, age, condition, and location. If your neighbors' homes are selling for $350,000 but the county says your similar home is worth $420,000, you have a clear case for appeal. The timing of comparable sales matters. Most counties will consider sales from the 6 to 12 months before the assessment date.

How It Varies by State

TexasAssessed at 100% FMV

Market value is determined as of January 1 each year. Only sales before this date are considered by the CAD.

CaliforniaProp 13 base year value

Market value only matters at time of purchase or new construction. After that, annual increases are capped at 2% regardless of actual market movement.

Florida"Just Value" = market value

County appraiser must determine just value each year. Homesteaded properties have capped increases but can be reassessed to market value on sale.

Illinois33.33% of FMV

Assessed at one-third of market value. Cook County reassesses every 3 years; collar counties every 4 years.

Common Misconceptions

Myth:My Zillow Zestimate is my market value

Reality:Zestimates are automated estimates with a median error rate of several percent. They are not appraisals and are not accepted as evidence in tax appeals. Actual comparable sales are the gold standard.

Myth:Market value is what I paid for my home

Reality:Your purchase price reflects market value at the time of sale. If you bought in a hot market, overpaid, or purchased years ago, your purchase price may differ significantly from current market value.

Myth:Declining property values are automatically reflected in my assessment

Reality:Counties often lag behind market changes. If your market has declined, you may need to file an appeal to get the lower value reflected in your assessment.

Impact on Your Tax Bill

In Georgia (40% assessment ratio), if the county estimates your market value at $350,000, your assessed value is $140,000. If comparable sales show your home is actually worth $310,000, the correct assessed value should be $124,000. At an effective tax rate of 1.0%, that $16,000 overassessment costs you $160 per year.

How to Use Comparable Sales in a Property Tax Appeal

Is My Property Overassessed? How to Tell

Find out if your property is overassessed: the 3-minute test, 5 red flags, what overassessment costs you, and how to fix it with a property tax appeal.

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