Assessed Value vs. Market Value
Assessed Value vs. Market Value - Assessed value is the valuation
placed on property by a public tax assessor for purposes of taxation.
It is not the same as Fair Market Value. Fair Market Value is the
agreed upon price between a willing and informed buyer and a willing
and informed seller under usual and ordinary circumstances. It is the
highest price estimated in terms of money which the property will bring
if exposed for sale on the open market with reasonable time allowed to
find a purchaser who is buying with full knowledge of all the uses and
purposes to which the property is best adapted and for which it can be
In California, the tax collector may not change
assessed value of a residential property until the property is
transferred. This is a protection known as Proposition 13 protection,
named for a public referendum that initiated the law. However, if the
market value should fall below the assessed value the homeowner may
petition the tax collector to lower the assessed value.
Petitioning the value is really a simple process.
is usually a certain time during the year where the appraisal district
will hear your petition and render a decision.
Homeowners like when their homes' "market values"
steadily increase every year, because it helps to raise their net
worth. These same homeowners dread when the "assessed values" of their
homes also increase, which most likely translates into higher property
The county determines your assessed value and an
appraiser determines your market value.
It is also good to know what percent of valuation
city or town uses to determine tax rate. You can find this out by
looking at your tax bill or contacting your town or city assessors
Depending on what state you live in your assessed
can change when you do home improvements. When you get permitted they
re-assess your home.
The assessed value is nearly always out of date by
time you get it. Each state has different laws determing what date the
estimate of value is to be determined for.
A realtor will tell you the Fair Market Value is the highest price
agreed upon. Most underwriters and appraisers define it as the most
likely price to be agreed upon. That's why underwriters insist upon
several comparables in the appraisal report, and don't usually just go
by the sale price.
Homes Market Value - In the real world, very few
individuals order appraisal reports to establish an offering price or
to substantiate a purchase price. At the point that an offer to
purchase (in a typical residential transaction) is made, the price has
been set by other parties, not the purchaser. The price has been
determined by the seller, who wishes to obtain the highest price
possible, or the agent, who receives a percentage of the price as
compensation and often represents the seller in the transaction.
The sellers realtor's job is to do market analysis
price the property accordingly. If the sellers realtor did there job
correctly then the asking price should be a correct asessment of value.
There are different types of housing values
One type of housing value is the assessed home value which is assessed
usually by your county auditor. Usually your assessed home value is
less than the actual market value of your home may be. This is usually
a good thing because the assessed value of your home is generally the
basis for your property taxes.
Often, the asking price for the home is based upon
comparable sales in the area - similar homes that have sold recently.
Using the selling prices for those homes, they can determine what the
home should sell for, and price the home accordingly.
Before buying (or selling) it is wise to do some
homework and look at what similar homes in your neighborhood or town
have sold for recently. This information is available at county
recorders offices, town offices, and from some websites. Of course, the
ultimate is to have an appraisal done by a professional appraiser. This
will be done anyway before any lender provides the purchase money loan.
There are several online sites that can give you
estimate of your home's value. However, whether you are buying or
selling, a real estate agent has access to the latest sales data and
can give you a more accurate value for your home.
If you don't already have a real estate agent, call me and I can
recommend one. 414-303-1215
How can I find out my homes value? - You can check
a local Realtor. They have access to comparable sales and can give you
a pretty good idea what homes are worth in your area.
Some online value estimators are actually lead
generation sites for realtors. keep that in mind when using them.
One easy way would be to call me! Although it
be a substitute for a professional appraisal, I can access records of
closed sales in your neighborhood and compare them to your home. I can
also access the Multiple Listing Service and see what kind of prices
similar homes as yours are currently being listed for. Short of
performing a full appraisal, you will get a very good estimate of the
value of your home.
You can call a professional appraiser and pay for
his service as often as you'd like...
A real estate agent (Realtors are members of the
National Association of Realtors) can give you a value. Many real
estate agents have a good idea of how much a property is worth by using
comparable sales. Rmember that comparable sales are historical and the
best are the most recent as the comparables get further back into
history the less accurate they are
Make sure that if you decide to spend the money on
appraiser that you interview the appraiser and ask about the
appraiser's experience. Appraisers who work mostly on loans may not be
the best appraiser for you unless you want a loan. If the appraiser
does not ask you what type of appraisal you want and the form type you
are probably not going to get what you want. There are many appraisal
types, make sure you get what you need.
Online value estimators are only as accurate as
they have available. The more recent the data the more accurate. The
more conformity you have in the type of properties the more accurate.
An online value estimator in a tract situation where there is a lot of
turnover will be the most accurate. Remember the online value estimator
has absolutely no way of knowing if you have the original Formica or
unpgraded granite counter tops. I can not tell if you have upgraded
your bath or your kitchen and as you get away from identical tract
homes the online value estimator is reduced in accuracy exponentially.
In fact they can be so bad that there is pending legislation and
pending litigation that could result in their permanent demise.
The best thing about online value estimators is
they are free. Although they are getting better, they do not have all
the information needed to provide the most accurate value, and they
won't be accepted by a lender as an appraised value.
For the purposes of obtaining home equity line of
financing, many lenders will allow your homes value to be determined
using automated property valuation software or simplified ("drive by")
appraisals or broker price opinions.
To get a general idea of your home's value you can
an online value estimator. Online value estimators can provide you with
a general idea as to the value of your home on paper. These should not
be construed as an appraisal report or a true value of your home, but
can usually provide a basic idea of your home's value.
If you are unsure of the value and it is crucial
you need find out an accurate amount, hiring a professional appraiser
is possible as well. This can be the most expensive option, but also
the most accurate.
There are many different online value estimators
are free, another source is a program made available through the
government that generates the house value based on historical
appreciation rates in your area.
The only way to find out the exact market value of
your home is to hire a professional appraiser to come in and do the job.
How accurate are value estimators? - Most online
estimation sites will only be able to judge a value if your local tax
office has updated their online database. The results given are only
going to be as good as the information available. To know a more
accurate value for your home, you will need to hire an appraiser.
On-line value estimators are more accurate in
where there are very similar homes, this is known in real estate as the
theory of comformity. In areas where there are homes of different
architectural types, size and in general are not similar, the value
estimators can be off by huge amounts. So if you live in a tract with a
lot of recent sales your estimator can get you quite close. I you don't
live in a tract or you live in a rural area the estimators are quite
Online value estimators should not be used as a
method for determining value on a property. There is no substitution
for a complete appraisal carried out by a board certified or state
Many online value estimators are actually tied to
realtor that will visit you within 1 to 2 days after entering your
information, as a means to be the first realtor to visit you. The down
side is that they may give you an unrealistic amount that you can
expect to receive from the sale of your home, as a means to get the
There are many different sources on-line for free
estimates of the value of your home. Unless you are getting a true
appraised value of your home you should not pay for the online
estimates. If you would like a list of links that can help you
determine the value of your home please contact me.
You can usually keep a finger on the pulse of the
by reading newspaper classifieds (real estate section), and inquiring
of the price when a home in your neighborhood is for sale. This will
achive far better results to determine the general value of your home,
than using an online value estimator.
One of the major drawbacks to online estimators is
they do not take into account specifics of your property that a realtor
or appraiser would. For example take two identical houses that were
built in right next to one another in 2001. House A has finished their
basement added a deck and built a fence, while House B has remained
unchanged since being built. In many cases the online property valuator
would give both properties the same value, when in reality House A is
quite possibly worth tens of thousands more.
When using an online estimator, make sure they use
previuos "sold" prices, not current list prices. If the address of the
comparables used are listed, go and check them out to see how they
Online value estimators also do not take into
any upgrades inside the home that have been made or updated. Only a
true appraiser who comes out to the property can give an accurate value
of the property.
A Legal Appraisal by a licensed appraisal is the
only true and accurate tool to evaluate the value of a home.