I have a question regarding the condo I recently bought: I have received a letter from the city stating this condo’s value has been reevaluated and dropped. Also, I can see the dropping value online. Is that going to have a huge impact on my home’s value, or it is just general asset valuation around the area?”
My Response:
Please do not be concerned. This is just a general asset valuation in your area for tax purposes. Assessed values, in practice, really do not have much of an impact on market values. In some years and in some towns and neighborhoods, the two values match up closely, but typically there is a spread.
Why?
Assessed values are given by the tax assessors office. While assessors are mandated to give an assessed value that is a “fair market value” of a property, they often don’t have the best and full information about a property. The assessor hasn’t been inside the property, hasn’t seen how it looks, the condition, how the square footage lays out, etc. They judge value only by publicly available data (which sometimes can be inaccurate).
Also, assessed values typically lag market values, as succinctly explained by George Warshaw in a previous post:
Any increase or decrease in the value of your property that appears in a January tax bill doesn’t relate to the year in which the bill is issued; it relates to the previous tax year! The value the city puts on your property that appears in the tax bill issued in January 2013 is what the city believes your property was worth on January 1st 2012 – one year ago!
Market values are dictated in real time by active participants in the market: buyer and sellers negotiating deals, you can also use a home value estimator for more accurate predictions. Buyers have seen the property (as well as others they compare it too) and sellers own the property, so the market itself will have a much more accurate sense of value. It’s not just someone’s estimation of market value (like assessed value). It is market value.
I went on to say to my client, that due to the fact that there is such low inventory on the market in Boston where you purchased your condo, and that sales and prices are way up recently, I would say your condo is worth at least what you paid for it 6 months ago if not a little more already.
So the assessed valuation is low. Enjoy your tax break!
It also happens that an assessor over-shoots your home’s value as well. If you feel your home has been over valued by the tax assessor, you could file for a tax abatement. Does your home qualify for a tax abatement? Learn more.
Want to learn more about the difference between assessed value and market value of your home as it relates to a possible sale? Attend our home seller class.
If you’re a buyer and want to gauge how your purchase price might affect future assessed values and property tax bills, attend our home buyer class.
