Many sellers assume that their home’s assessed value and market value will be the same or similar, but this is not always the case. In fact, there is no real correlation between these two values at all.
While the numbers are usually similar, an increase in one does not necessarily trigger an increase in the other. It is important that sellers understand the difference between these two numbers and the factors that can influence this difference.
The assessed value of a home is the number that the city and county governments use to calculate the taxes owed on the home. This number is calculated at the start of each year and does not fluctuate at all in between assessments.
The market value, on the other hand, varies from season to season based on current market trends. If property values fall, the assessed value will slowly follow suit, but there is usually a delay.
In some areas, the assessed value can be a wildly inaccurate predictor of a home’s final sale price. If you see a home that is advertised as listed below the assessed value, this is typically not an indicator that you are getting a good deal on the home. More than likely, this phrasing will mean that the home was assessed at a value higher than what the home is actually worth. This will not increase the sale price but it does mean that the previous owner might have been paying higher than necessary taxes on the property.
Unfortunately, some inexperienced buyers might interpret a list price that is below the assessed value as a good thing. An experienced real estate agent will be able to explain whether or not a home is a good deal. This is why it is so important for buyers and sellers to hire an experienced real estate professional before they make any major decisions.
Make sure that you talk to your real estate agent about your home’s fair market value as well as its assessed value. In some cases, a real estate agent might only offer unsolicited advice on the home’s fair market value if it helps to show the home in a more positive light.
At the opposite end of the spectrum, some homes might be listed for a price that is higher than the home’s assessed value. In this case, it is up to the real estate agent to research whether or not the home is worth what the buyer is asking. If a home has not been appraised recently or if the most recent appraisal was inaccurate, the market value of the home could very well be higher than the appraised value.
In some cases, this information can be used to negotiate the price. Some sellers might accept a lower offer if the list price is much higher than the value of the home. It is important for potential buyers to find out if a home is over or undervalued before putting in an offer on the property.
Are you looking for an experienced real estate professional to help make the home selling process easier? Contact me today. I’d love to hear from you.