What Is The Difference Between Tax Assessed Value And Actual Value?
What is tax assessed value, and why is it so different than actual value? While I cannot speak to the role that the tax assessor plays in valuing property, I can speak to the role that real estate agents play in determining the best price for a home.
When a homeowner determines it is time to sell their home, they will contact their agent of choice. At this time, the agent will get the pertinent information and visit all of their resources to determine a range of value.
When this initial process is complete, the agent will schedule a time to visit the home, and confirm any updates and all investments that the homeowner has completed since they've owned the home. All of these things enter into calculating the actual value of the home. However, the primary driving force behind the value of a home, is what other "like homes" in the area have sold for. This is an average, not an absolute value. Just because your neighbor was in a dire financial position and was forced to sell their home for rock-bottom value, doesn't always mean that your home is now valued the same.
Unless your home is steeped in "custom this" and "custom that", it will likely be fairly easy to determine its range of value. Ultimately, though, the home is worth what a buyer is going to pay for it. Now, this does not mean you can offer $50,000 less than asking price, just because you don't want to pay what the homeowner is asking for it. When you have decided you want a house, make sure your agent completes a thorough "Comparative Market Analysis" (CMA) so that you can confidently offer a fair price. It is rare, but sometimes the CMA reveals that the home is way overpriced. This is why it is so critical that you have an agent that truly represents your best interests, and not just someone looking to cash a commission check.
As a homeowner, you welcome a low "tax assessed value", because that generally means you're going to pay less in property taxes every year. When you can keep more of your own money, that is always a good thing!
In addition, unless you are paying cash for your home, your lender is going to require the home to appraise at least what they are lending for it. For instance, if you are borrowing $265,000 for a home, and it appraises at $266,000, do not fear. This is common, and doesn't exactly mean that your home is only worth that. This is simply the appraiser telling the lender, that the home is worth what the bank is lending on it.
I hope this short description helps in your understanding of the difference between tax assessment and actual value. If you'd like to discuss it further, or if you'd like to determine what your home is worth, please don't hesitate to contact me!
Ben Watt is a licensed salesperson of EXIT Realty North Star, 1039 Sunset Dr Norwalk, IA 50211. We provide full service real estate services to the Des Moines, Iowa metro area. Find links and contact information for Ben at searchdsmhouses.com
Integrity. Passion. Excellence.