Have you ever wondered what the difference is between assessed value and market value?

Or how much over assessed value you should pay for your home?  This is one of the most asked questions I get from homeowners.  Whether you’re thinking of selling or not, I think you’ll want to know too. 

 

Oftentimes I hear statements like, my home is assessed at $650,000, do you think I could sell for about that?  Then comes the next question, what’s the difference between assess value and market value anyways?  Let me explain, then I’ll share how you can decide the best price to list your home for. 

 

Assessed Value

Let’s start with the assessed value. The assessed value of your home is used to calculate your property taxes. This value is determined by an assessor assigned by your municipality. The assessor comes up with a value based on:

 

•  homes recently sold nearby 
• the size and location of your home
• take into account any recent updates that you might’ve made

 

They get this information by pulling county permits. That is permits for remodeling additions or things like that. The assessed value of your home is public records and can be accessed by anybody online. It’s very common for the assessed value of a home to be lower than the market value of a home. But, how much over assessed value should you pay for a home?  Well, this is why it’s so important to talk to a real estate professional before buying or listing your home.   They can help you determine the best offer price or sale price for the home. You want to make sure you’re making an informed decision and not only taking the assessed value into consideration. 

 

Market Value

The market value of your home is determined by a variety of characteristics. The biggest one being location, location, location!  Along with the following:

 

• Lot size 
• square footage
• size of the home 
• Updates you may have made 

 

Kitchen and bathroom updates play the biggest factor in the market value of your home, as well as things like finishes in the house.  The market value also takes comparable homes into consideration. They look at what is currently for sale and what has sold in the recent past. When preparing a market valuation most agents try and keep past sales within the last six months. This gives them a good idea of what a willing buyer is going to pay for a home.  

 

Supply and demand determine whether it’s a sellers market or a buyer’s market.  What this means is how many homes are for sale and how many buyers are out there looking to buy those homes.  After compiling all this data, you have all the information you need to come with a great list price for your home.

 

Online Valuations

After compiling all this data, you have all the information you need to come with a great list price for your home. If you’re looking at sites like Zillow to figure out your market value, you may want to get a second opinion. Many times the valuation is unrealistic, and either lower than what you should price it, or significantly higher. The average error of a zestement in larger markets is about 2% of the sale price.  

 

I recently worked with a seller who thought his home was valued at $45,000 less than what was determined to be the market value. He was basing this solely on a compilation of assessed value and information found on Zillow.  Since Zillow or similar sites have never been inside your house, the condition of the home isn’t considered in the calculation. Typically values are generated based on the neighborhood homes that have sold in recent months along with other public information that can be found about your home.  

 

Pricing Your Home

How should I figure out what price to list my house at then? First of all, you’ll want to have a professional come tour your home.  During the tour you can share with them any upgrades that have been done.  This is also a great opportunity to talk with a professional about things you can do to make your home more attractive to buyers. Realtor’s are out in the market, showing homes and will know exactly what the current trends buyers are looking for in a home.  They will be able to help you market your home to attract those buyers. You wouldn’t want to make the mistake like my seller above thinking of pricing your home forty-five thousand dollars below market value and leaving money on the table. It’s well worth the time to meet with a professional before pricing your home for the market. 

 

Quick Recap

In summary, the assessed value is the value that’s used to calculate your property taxes and market value is what is determined by the demand of current buyers in the current markets. So, how much over assessed value should you pay for a home?  It depends, remember to always consult a real estate professional before deciding to list your home. Your home is likely your biggest investment and can continue to be an investment as you sell, buy and re-invest in other real estate continuing to build equity. Make sure you’re making smart, real estate decisions and not leaving any money on the table.   Click HERE to get your complimentary market value of your home.