Ask Bill Real Estate is a weekly column hosted by 36-year Real Estate Pro Bill Gassett. Bills Q&A will answer the most difficult questions for real estate agents, DIY, first-time home buyers, and mortgage lenders email your questions now to [email protected].
Question from Mike Collins, Rochester, New York: How do I find a property's assessed value?
Are you looking to know your home’s assessed value, or do you want to know how to find the assessed value of another person's home?
If so, then you’ve come to the right place. We will discuss finding a home's assessed value and what factors go into the estimation.
It is essential to understand that assessed value vs. market value is very different. You could easily make a wrong decision when buying or selling a home without knowing this fact.
The easiest way to find a home's assessed value is to visit the local assessor's office or call a real estate agent. The assessor's office will have the assessed value of every property in a city or town.
A real estate agent also has a multiple listing service database that will provide this information. Of course, if you have never owned a home, you may not realize the assessed value will be provided on your real estate tax bill.
The local government determines the assessed value and calculates the taxes needed to cover local appropriations.
The property's assessed value is what the local tax assessor has determined the property is worth for tax purposes.
The market value is what a buyer is willing to pay for the property. A property's assessed value is rarely the same as its market value. Homeowners can get property value wrong when they use incorrect information!
For a more in-depth analysis of how they differ, see Maximum Real Estate Exposure's detailed analysis of these two valuation figures by visiting the reference above.
Some real estate agents may confuse the public by advertising real estate listings with misleading information. They may say something like, "Look at the great value in this home which is priced below the assessed value."
Many homes are listed for sale at a price below the assessed value, and many are sold for a price above the assessed value. There is little correlation between the two.
When buying or selling a home, it's important not to confuse the property's assessed value with its fair market value.
Assessed values can be higher or lower than a home's market value.
The market value is the estimated price that a home would sell for in the current housing market.
It is determined by considering factors such as house size, location, similar properties, market trends, and the home's condition.
Market value is determined by real estate agents who will perform a market analysis. The comparative market analysis or broker price opinion will have comparisons with other similar properties. These homes are referred to as "comps."
Agents will make adjustments based on each of the properties strengths and weaknesses to determine value ultimately.
A professional appraisal is often conducted when a home buyer gets financing assistance from a mortgage lender. Lenders will want an appraisal to ensure the property has enough value.
Lenders never want to be stuck with an asset worth less than the mortgage amount. Appraisers will visit a home and perform an analysis of value.
Appraisers do much the same thing as real estate agents. Comparable properties will be used to figure out the subject properties' value.
An appraiser will use houses with similar characteristics. Lenders also hire appraisers when homeowners want to refinance their existing mortgage or get a home equity loan.
A vital takeaway is that your home's assessed value should not be looked at as having any relation to the property's market value.
Understanding market value is crucial when buying or selling a home. From a seller's perspective, pricing a home correctly is essential to get the best price. Overpriced homes will end up selling for less than they should.
Overpriced homes can quickly become stigmatized. As days on market grow, so does the list price-to-sale price ratio.
From a buyer's perspective, nobody wants to overpay for a home. It is just as important to never use assessed value for purchasing decisions.
Your buyer's agent should guide you on an appropriate offer for a property you're interested in purchasing.
By now, you should understand that assessed, market, and appraised values are different. Use the information appropriately when making real estate decisions.
The assessed value will be nothing more than a factor in what you will pay in real estate taxes.