What Is The Difference Between Assessed Value Vs Market Value?
The assessed value and the market value of a home are two very different concepts often leading to confusion amongst homeowners. They are usually viewed as things that should be similar but in reality, they are very different from each other. Generally, the assessed value of a home is much lower than the market value which will be explained below. What is market value?
The market value of a home is the amount of money the home would generate if it were sold at listing price in an open market. This is the number that most real estate agents and appraisers
try to determine in an effort to calculate out what a home is actually worth at a certain point in time.
An experienced real estate agent will attempt to be as accurate as possible when determining this number because it is one of the most important parts of their job. Real estate agents may all have a slightly different approach when determining the market value of your home, but they generally will research the items listed below.
Exterior: In addition to curb appeal, agents will look at the size of the lot, house style, and exterior conditions such as landscaping.
Interior: In addition to the exterior features listed above, the interior features of a home are also very important. Items like the square footage of the home, how many rooms it has, the decorating, the amount of updates, the heating systems, over all energy efficiency, and the condition of the appliances are all taken into consideration when calculating the market value.
Similar Homes: An agent will research houses that are similar to the home in question. These similar homes are also known as comparables or comps for short. Comparable homes give agents and appraisers a good idea of what buyers are most likely to pay for a specific property and therefore are helpful in determining the market value of the house.
Supply and Demand: If there are more buyers than sellers, then supply will be low and it will lead to a seller’s market. That means higher prices for homes can often be charged. Alternately, if there are more sellers than buyers, then supply will be high and that will lead to a buyers’ market. This means that buyers can get away with offering less than asking price or be more aggressive in their negotiations.
Location, location, location: As the saying goes, location is one of the most important factors and an agent will evaluate the neighborhood, school districts, crime rates, walk score, and other factors that may affect a home’s price.
What is assessed value?
Assessed values are relatively similar to market value, except they are not calculated by a real estate agent and are used for a different purpose other than selling the home.
Most local City or Town governments employ property assessors whose sole job is to determine how much a property is worth to help calculate the property taxes a homeowner will have to pay.
This figure is calculated by utilizing comps (similar properties) as a starting point. From there an assessor will look at recent improvements, rental income, or how much it would cost to replace a home if for some reason it was destroyed by a natural disaster or a fire.
Assessed value and property tax bills
When an assessor has finished their assessment, they multiply the assessed value by the assessment rate. Various tax jurisdictions have their own assessment rate so it is very important to look at your City or Towns property assessor’s office website to figure out exactly what the assessment rate is.
As an example, if an assessor determines a home is worth $400,000, and the Town where the homeowner lives in has a tax rate of 70%, then the taxable value of that home is $280,000. This number is then multiplied by the mill rate to figure out the amount of property tax due.
Disputing assessed value
Homeowners sometimes dispute their property tax bill by claiming that an assessed value is too high. Basically, they are asking that the property assessor’s office review their property value in hopes that they are going to achieve the goal of lowering their property tax bill.
Either an attorney that specializes in this form of legal dispute can be hired or a homeowner can simply go to the property assessor’s office and file an “application for tax abatement”.
Every city and state has different rules to comply with when disputing the assessed value of a property, so again, it’s best to check with your City or Towns assessor’s office too find out exactly what the process entails.
Venture One Realty has recognized that Connecticut Homeowners need and want a way to keep more of their hard earned equity when selling their home. Our Clients save Thousands of Dollars without sacrificing the services that are critical to maximizing the sale price of their home. We offer all the same MLS exposure, marketing tools, technology, quality of service, expertise, and personal attention as the Other Realty Companies but without the costly Real Estate Commission. You pay only 1%.
We are a full-service Real Estate Agency that will manage the entire home selling process from listing to closing. You get everything you would expect from a traditional Real Estate Agent but with the added benefit of working with a technology-enabled and customer-focused team of Agents. Our results speak for themselves.