What is an assessment and how does it affect what I can sell my house for?
Posted by Heidi Fore on Sunday, May 22, 2016 at 3:26 PM By Heidi Fore / May 22, 2016 Comment
If you want to skip to the bottom line of this blog post, here it is: you cannot look at the tax assessed value of a property to determine what you could buy it for or sell it for.
There are about a 1,000 reasons for this. Here are a few:
(1) Assessments change for many reasons. A wife could sell the house to the husband in a divorce. A person could sell the house to their grandkids at a low price.
(2) If there was a short sale, the assessed value would change to the lower value when the new owner buys it.
(3) Property owners can appeal their assessments after purchase to get the assessment lowered so that they can pay lower taxes.
(4) Seller motivation has nothing to do with the tax assessed value. Someone could own a house for 50 years, have a lifetime of memories in that house. It could be in a great location. The tax assessments could have gone up minimally during that time and so that seller could sell their house for much more than what the PVA office says the house is worth. It is all up to the buyers who are buying in that area.
(5) The assessment can go up too. Periodically, Jefferson County will raise rates for an entire area all at once. They do not take into account the condition of the home or any remodeling or added rooms. People don't tell the County about some remodeling they did to improve the property value because that would mean they pay more in taxes. Howwever, a buyer would pay more for a house with a remodeled bathroom, new floors, new appliances, or new windows. Therefore, for all those reasons, the tax assessed value has nothing to do with the market value.
The market value is the price a buyer is willing to pay for what the house has and where it is.
Most buyers need a mortgage to buy a house. That means they must get an appraisal to verify the sales price is a fair market value. Appraisers measure the house in question, look at houses that sold within a 1/2 mile in the last year, and that are 10% bigger or smaller in size. They then look at number of bedrooms and bathrooms and adjust as necessary. Then they tell the bank if it is worth more than the price that the buyer and seller agreed to. If it is the same or higher, the sale proceeds. At no time during the entire home buying and selling process does anyone look at the tax assessment except the County office that collects taxes at closing time.
Realtors know what fair market value is for a property. Trust a professional to get you the data, not Zillow or any other automatic valuation sites. They cannot be as accurate as a professional with local knowledge. Call 502-265-5818 to find out what a property is worth.
Talk to someone who is with the River Valley Group at Keller Williams Realty.