The calls have started to come in: People have received their annual property assessments. Every year people ask what their property assessments mean. The key thing to note: Assessed values are not a reflection of market value. Market value is what a buyer will pay; assessed value determines your taxes. Assessed vs. Market values are often like apples vs. oranges...totally different things.
The assessments are based on the values last July 2020. The market value of most homes has increased since then. One thing that hasn't changed with the change in the market is that home owners cannot rely on assessments as anything other than an indicator of the value of their homes for tax purposes. Assessed values cannot be used as an indication of what a home would sell for!
In most cases, particularly this year, there is a significant gap between what the assessed values are and what people will pay for a home. Over the past several months on our listings, we have seen multiple offers on all types of properties, from older homes on busy streets, to top of the market waterfront. A few examples of the assessed vs. market values from our recent sales:
-a home assessed at $2,308,000.00 sold for $3,600,000.00. Market value was $1.292 MILLION over assessed value.
-a home assessed at $1,296,000.00 sold for $1,920,000.00. Market value was $624,000 over assessed value.
-a home assessed at $1,788,200.00 sold for $2,200,000.00. Market value was $411,800 over assessed value.
-a home assessed at $1,348,000.00 sold for $1,715,000.00. Market value was $367,000 over assessed value.
-a home assessed at $986,200.00 sold for $1,285,000.00. Market value was $298,800 over assessed value.
-a home assessed at $1,162,000.00 sold for $1,413,000.00. Market value was $251,000 over assessed value.
Obviously not all homes sell so much over assessed but these recent examples show why assessed value has little meaning except when determining how much you will pay in taxes. While we have seen amazing results this year, sadly we have also watched some home sellers (not our clients!) likely leave money on the table by not taking advantage of the current selling climate. Some may be thinking they did very well as they sold much higher than assessed. Even in this hot market some homes are being listed and an offer accepted before giving all the buyers waiting out there a chance to bid the price up to the maximum extent possible. I believe this is a lost opportunity to maximize the sale price. Assessed values were determined 6 months ago and the market has changed a lot since that time. To the benefit of home sellers! If you are thinking of selling, of course the market value is what you need to know (and try to exceed!) before you sell.
In most cases, the assessed values are too low. If you think your assessment is too high and you plan to sell your home in the foreseeable future, it likely does not make sense to appeal your assessment. The higher the assessment the better when selling as some people still don't know that the assessment does not reflect market value. The additional tax paid is likely a lot less than what you might lose on your ultimate sale price if buyers look at your lower assessed value and assume it reflects the home value.
However, if you plan to be in the same place for a long time and your assessment is crazy high, (rare) then you may want to appeal. When considering an appeal, the key question is “Is your home assessed at more than it is worth”? If not there is no point in appealing. The additional tax paid is likely a lot less than what you might lose on your ultimate sale price if buyers look at your lower assessed value and assume it reflects the home value.
If you need assistance on an appeal, I can give you some guidance. In addition to being a realtor, I have practiced law for over 25 years, and the assessment process is not very complicated to navigate. If you are considering an appeal, the filing deadline is February 1, 2021.
The key thing to keep in mind, regardless of where you live and whether you live in a house or a condo, is that the assessed value and the market value (what a buyer will pay) of your home are likely very different.... they can be apples vs. oranges. If you would like a free evaluation of your home and an estimate of its likely market value, please contact me.