Tax Assessed ValueThe tax assessor establishes an assessed value for the purpose of collecting the appropriate property taxes. Big Island assessed property values are established once every year on October 1 based on ‘comparable sales’ (similar size & location) that recorded prior to July 1st of a given year while also considering any market movements up until October 1.The assessed value on October 1 determines taxes for the following fiscal year, which begins the following year on July 1. That means tax assessed values lag behind the real market value by at least one year. Note: The tax assessor rarely inspects the inside/condition of the property, which means the tax assessor may lack information to consider such as expensive upgrades versus original or even tear down condition. Additionally, the tax assessor does not adjust for gorgeous ocean views, beautiful landscaping, or property frontage.
For example, a property in Kona with great ocean views, spectacular landscaping, and stunning curb appeal might have the same tax assessed value as a ‘similar property on a nearby busy street with a dilapidated interior and no view of the ocean. While both properties might have the same tax assessed value, the true market value for both properties could differ substantially. Hence, one of the reasons why lenders don’t use assessed value in their loan calculations since it’s far from an 'accurate' or reliable indicator of the real market value.
Appraised ValueThe appraised value (appraisal) is a professional value opinion completed for a fee by a licensed appraiser, often hired by mortgage lenders.  A licensed appraiser determines the appraised value by researching and comparing most recent (during the last few months) comparable sales (similar size & location) and uses certain predetermined detailed criteria to make adjustments for condition, upgrades, functionality, layout, etc. While appraisers have to be very detailed and follow specific formulas, 10 different appraisers still might come up with 10 different value opinions!   Keep in mind, that appraisals are subject to the person performing the appraisal (appraiser), and even with a high degree of detailed analysis and specific formulas used for calculations, the end result can often be different from one appraisal to the next.
Real Market ValueThe real market value is the price that a willing and able buyer pays for a property at that time. This could be affected by several market dynamics. For example, if two or more buyers are interested in the same property at the same time, it is possible that the property could sell at a higher price than otherwise.