Ever wondered how much your home is worth? Ever wondered why your property tax bill shows a value which is drastically different that what homes are selling for in your neighborhood?
The difference lies in the definition of market value versus assessed value.
“What’s my home worth?”
This simple question is often answered three different ways. Ask your public tax assessor, and you’ll get one number (usually low). Look up your house on Zillow and you’ll get another number (usually too high). The third answer is market value, and if you’re selling your house, you’ll usually figure out what that number is (for good or ill) in 30 to 90 days.
Many people are confused about assessed value versus market value. Assessed value is a number placed on a property by a public tax assessor for the purposes of taxation. Some percentage of your assessed value is used to determine your annual tax bill. The rules for the assessment vary, but typically the assessed value has more to do with how much money the municipality needs to raise than it does the number you’d arrive at after putting your home on the market.
Assessed values can lag behind true market values in both directions. They can vary widely from home to home in the same neighborhood, especially if a neighbor has appealed an assessment (usually for the purposes of lowering their tax bill). And by the way: assessed values don’t automatically adjust for you when someone else appeals their assessment.
Market value is the price at which a specific house in a particular location in current condition will sell for, typically within 30 to 90 days. Your real estate agent will try and predict the market value of your home based on all of these factors. In a hot neighborhood? It can elevate your home’s value. Have significant repairs to do or other condition issues? It can bring that value back down. The number one reason a home doesn’t sell is often related to a disparity between listing price and true market value. (Overbidding occurs when a home is priced below market value.)
Generally, assessed value tends to be below market value. Sometimes a buyer will attempt to negotiate a lower price on a home by citing assessed value, but this only underscores their lack of understanding about assessed value versus market value.
The best way to understand what your home is worth? Contact me, your trusted real estate professional, by phone at (905)940-3599 or by email at firstname.lastname@example.org today, and I’ll get to work on helping you determine the right price for your house in today’s market.