What is the difference between market value, appraised value, and tax assessed value?

I was recently working with a buyer who didn’t understand the different valuation models for real estate.  She was looking at the tax records of houses she was interested in purchasing and assuming the tax assessed value was the value of the home.  This is incorrect.  The following is a break down of different property valuation models.

MARKET VALUE : This is what a buyer is willing to pay for your home at the current time in the current market.  The value is usually based on comparable sales in your neighborhood as well as supply & demand.  Parameters include the same or similar lot size, house square footage, architectural style, and any extras such as in ground pools or extensions on the home.

APPRAISED VALUE : This is what your lender thinks your home is worth based on an appraisal report from a licensed appraiser. The appraiser will usually include 3-5 recent sales (past 3 months), and stay within .5 of a mile of your home.  It is used to determine your loan value, not market value. In most areas, a home must appraise for the full sale price.  The purpose of appraised value is to determine mortgage resale, not market value.

TAX ASSESSED VALUE : This is what your city or township thinks your home is worth. It has little to do with market value or what a buyer is willing to pay for your home. This is an independent value that is usually adjusted according to your local economy to determine your property taxes. For instance, areas affected by Hurricane Sandy saw tax assessed values drop so that home owners could pay less property taxes during recovery.