A question I often get is why is this house listed so far above the assessed value they see online. The assessed value is part of the public records and used to determine each property owner's tax payment each year, they are easy to come across. The list price and appraised value are done more similarly, house by house, and take into account up to the moment comparable sales and features, such as parking, garages, and pools. Below is more detail on how and why they are calculated and used.
Assessed Value: This value is determined by your local government's tax assessor's office. It's used to calculate property taxes. Assessors typically use mass appraisal techniques that take into account various factors such as location, size, condition, and recent sales of similar properties in the area. However, assessed values may not always reflect the current market value of the property accurately.
Appraised Value: This is the estimated value of a property as determined by a professional real estate appraiser. Appraisers assess the property's value based on its condition, features, comparable sales in the area, and other market factors at the time of appraisal. The purpose of an appraisal is often for mortgage lending or buying/selling purposes.
Differences between assessed and appraised values can occur due to several reasons:
Timing: The assessed value may not be updated annually and might lag behind changes in the market, whereas an appraisal is typically conducted at a specific point in time, often when a property is being bought, sold, or refinanced.
Methodology: Assessors and appraisers may use different methods and criteria for determining value. Assessors often rely on mass appraisal techniques and may have limitations in considering individual property characteristics, while appraisers conduct more detailed and individualized assessments.
Purpose: The intended use of the valuation may differ. Assessments are primarily for tax purposes, while appraisals are for determining a property's market value for various transactions.
It's common for there to be disparities between assessed and appraised values, but they should generally align to some degree, as both are attempting to estimate the value of the property. However, differences can arise due to the factors mentioned above.
Having your real estate agent do a comparative analysis of the home you are considering will be much more useful in planning an offer, and whether to make an offer, on a particular home.
If you’re in VA, DC, or MD and don’t have your own Realtor yet, reach out to Julie to get a good idea of a reasonable price for the home you found online julie.grandon@gmail.com or 703.606.5383.
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