Avoiding Assessment Trickery
When a property is listed for sale, the notification may state something to the effect of "buy this property for $50,000 less than assessed value". Do not be fooled by this form of advertising as it borders on false advertisement.
Due to the fact that property assessements, fair market value and appraised value can be three different figures, these types of advertisements can lead a buyer to believe they are making a much better deal than they really are. These are the three types of values assigned to a home and what they mean to a home buyer.
Assessed value - the value of a home that is placed by the taxing authority in the municipality. This may be calculated as a portion of the appraised value or a portion of the assessed value. This value is normally changed on an annual basis and may be impacted by changes to the property including upgrades such as new landscaping, painting a home or putting an addition on the home;
Fair market value - the fair market value of a home is determined by the current real estate market. This would be the value that buyers of homes that a buyer is willing to pay for a home. This value may be determined by a number of factors including the assessed value, the strength of the current market and the quality of amenities including schools in the area;
Appraised value - the appraised value of the home is determined by a licensed real estate appraiser. This value takes into consideration several factors that impact the overall value of a home. The appraised value takes into consideration comparable homes in the neighborhood that have sold as well as the amenities of the home including recent upgrades to plumbing, electric systems and heating systems. This value may be similar to both fair market value and to the assessed value.
Before a homeowner or home buyer can determine how close are the tax records for property market value, they need to understand how the municipality assesses the property for taxation purposes. In some municipalities the assessed value is based on 100 percent of the fair market value, which may be changed annually. Some municipalities may not change the assessed value until a home is sold.
It is important that buyers understand the assessed value of a home as it will have an impact on their home buying power. The assessed value may also have serious implications regarding escrow accounts that may be required by the lender. Buyers can research the various assessment methods used by taxing authorities by reviewing the assessor links that are provided by Real Marketing.