Massachusetts Real Estate

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Assessed Home Values Rarely Equal Fair Market Value

Over the last few years in Massachusetts as well as many other parts of the country we have seen a rapid decline in Real Estate values. In many towns around Metrowest Massachusetts it would not be unusual to see a home that sold in 2007 for $500,000 to be re-sold today around $450,000. It is an unfortunate fact of life. All good things tend to come to an end at some point.

One of the common lines of thinking that occurs when Real Estate values are heading downward is that the home owners tax bill must also be coming down too. Part of this misconception occurs because people assume that the fair market value and assessed value are the same.

In theory this should be the case but assessed values are nothing more than a yard stick for a municipality to collect an appropriate amount of taxes to sufficiently cover the state and local appropriations chargeable to the city and town.

 

 

Lets go over a few facts about your homes assessed value and the role of the towns assessor:

Assessed and fair market value of homes1.) In Massachusetts assessed values are based on 100% of full market value.

2.) Town Assessors are required to submit assessed values to the state Department of Revenue for certification every three years.

3.) The assessors review sales data and the Real Estate market every year and thereby reassess values each year.

4.) Assessors do not raise of lower taxes.

5.) Assessors do not make the tax laws which affect property owners.

6.) The Assessor's Office has nothing to do with the total amount of taxes collected.

7.) The assessor's primary responsibility is to find the full and fair market value of the property so that the taxpayer pays only their fair share of taxes.

 

As we head toward January, there is no doubt that you will see the assessed value of many homes coming down across Massachusetts. What you are also very likely to see is an increase in the fiscal tax rate to cover the difference in the lower assessed values.

As previously mentioned above, the numbers used are all just part of the game of collecting the proper amount of revenue to run the town.

So what are you supposed do if you think you are not being taxed properly in relation to other similar homes that have sold?

You should go to your local tax assessors office and file for an abatement. All the information necessary regarding the application process and the deadlines for filing should be available.

Applications for abatement's are due on or before the due date for payment of the first actual bill. The assessor has up to three months in Massachusetts to act upon your abatement request.

What happens if you do not feel that the assessor made the proper ruling on your abatement request? If this occurs, you have the right to appeal to the State Appellate Tax Board.

In Massachusetts there are some who are exempt from all or part of their property tax obligations. Exemptions are available to those individuals that meet the various requirements in the following categories: 

  • Elderly
  • Disabled Veteran
  • Blind
  • Widows and/or Widowers
  • Minor Children with a Deceased Parent
  • Minor Children of Deceased Police or Firefighters killed in the line of duty

Applications for tax exemptions can also be obtained from your local tax assessor's office.

In Massachusetts senior citizens have also been able to claim a refundable credit on their income taxes for property taxes paid on residential property owned or rented. This law is known as the Senior "Circuit Breaker" Tax Credit, it is equal to the amount by which their property tax payments in the current tax year (excluding any exemptions and/or abatement's), including water and debt sewer charges, exceed 10% of their total income for the same year.

To claim the credit, eligible taxpayers must submit a completed state Schedule CB, Circuit Breaker Credit, with their state income return.  The form is available on the web at Circuit Breaker Credit.

As a Realtor who has covered local Metrowest Massachusetts Real Estate for the past twenty three years I often come across some really silly marketing by other Real Estate agents in regards to a homes assessed value. Things written in the Multiple Listing Service (MLS) like "What a bargain this home is priced X dollars below assessment." Most of the time the Realtor is making a very poor correlation between the assessed and market value.

When I see something like this my immediate thought is that the home owner has been paying too much taxes on their home or the assessment has not been adjusted yet.

In just as many circumstances I have seen a home with a lower assessment and a buyers Realtor try to argue that the home is overpriced because of a low assessment.

The take home message is that if you are considering buying a home, you should not rely on assessed value as a good measuring stick of market value. There are plenty of homes that are over and under assessed in Metrowest Mass. Hiring a good buyer's agent that can point point a homes true market value is always a wise move!

See also: Assessed home value v.s fair market value

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About the Author: The above information on assessed home values rarely equal fair market value wasremax executive realty hopkinton ma provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. 

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise! 

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I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

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119 commentsBill Gassett • December 29 2008 02:19PM

Comments

Bill, We have companies here who grieve taxes for people every year....if they win they get half.  They usually don't win :(  This is good advice and some very helpful links for those in Massachusetts to hopefully get their taxes down.

Posted by Laura Cerrano, Authentic Feng Shui Expert (Feng Shui Manhattan Long Island) over 5 years ago

Carole - It seems there are always companies out there that will handle a task like this and charge someone for it when it could be easily taken of by the home owner or even a Realtor they may know for FREE.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill, we have the same situation here, some townships are open to reducing the tax rate and others forget it. There are 3 in my area that just refuse. I have pulled comps for many past clients in the last year and now I know which ones it is just a waste of time. It really is a shame to be paying taxes on a home that is assessed over what the client paid.

 

Posted by Missy Caulk, Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 5 years ago

Missy the biggest problem with assessed value is that too many people try to draw a correlation between the number and actual market value. There is almost always a disparity whether it is because of the lag in time from when the assessment was done or whether the assessed value was never close to the real value to begin with.

The other thing people forget is that there are factors which will drive up as assessment but not the market value. A home with 5 acres of wetland will be assessed much greater than the home with one acre all things being equal. The home with the 5 acres of wetland most likely will not have a great market value than the home with one usable acre. This is one quick example.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

This is an excellent post and I hope that it is featured. One of the huge flaws in tax evaluations is that when the market goes down the Taxing Authority is slow to follow and if Mass. is like Tx. and uses a mass appraisal approach, the values are even more out of whack. Another problem n Texas is the privacy issue so sold comps are NOT public knowledge and for all practical purposes site like Zilloware virtually useless in this endeavor! I sometimes fight property taxes for clients and my strengths come from the fact that I have actual sold data and I have been inside many of the homes I use as comps. The County appraisers have rarely done so. We had a 3 year period in Travis county where the Chief Appraiser was extremely aggressive and hardly open to reason that made the whole thing incredibly contentious but he retired last year and hopefully the process will become more fair!

Posted by Russell Lewis, Broker,CLHMS,GRI (Realty Austin, Austin Texas Real Estate) over 5 years ago

Bill--Good information for all homeowners! I have been recommending to all of my buyers to keep the copy of the appraisal handy as early in 2009 they will have an opportunity to file a challenge to the assessed amount. Many homes are appraising for significantly lower than the current tax value and it is important to have documentation from an outside source when meeting with the assessor regarding the value of the home.

Posted by Teri Eckholm, Acreage & Lakeshore REALTOR Minneapolis St Paul (REMAX Specialists) over 5 years ago

Russell it certainly does sound like more of a challenge down in Texas. Hard to believe at this point in time there is no access to homes sold data. I can see where a good Realtor like yourself who knows the inventory well could be of great assistance to those home owners that are entitled to an adjustment.

Teri - One would think that an outside appraisal would be a good start in building a case for a tax adjustment. I am not sure what the success rate is in your area but here in my home town they will certainly listen to you if you make a good arguement for an adjustment.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill - - thanks for the LinkedIn note about your post. Taxees are done differently here in CA. People have been able to file for a temporary drop in their property taxed due to the changes in the market, and some communities have inplemented a change across the board. But they will be readjusted at the appropriate time. In some cases assessed values are way below market, and in others they are actually above. That changes once the home sells.

Jeff

Posted by Jeff Dowler CRS, Carlsbad CA Homes for Sale (760) 840-1360 (Solutions Real Estate ) over 5 years ago

Jeff it is interesting how assessed values work differently in many parts of the country. We see the same thing here in regards to assessed value being way over or way under current market value.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

We are seeing a lot of reassessed value here...and I can't say its to save taxpayers money...tax office is floating around trying to make sure...those that claimed exemptions based on use...value...etc..etc...are true!  We have extremely high taxes here...and at one point...we were the 3rd highest in the state of Florida...why I am not sure...but one thing....WE NEED SOME COMMERCE HERE! 

 

Posted by Midori Miller, Homes In Fort Lauderdale, Real Estate Training - R (Better Homes Realty - BH Referral Associates ) over 5 years ago

 Midori assessed value is all about taxes and revenue that a town needs to generate. The assessment and tax rate are just semantics when it comes to what a particular town or city needs for revenue. We have high taxes here in Massachusetts as well. Hence the name Taxachusetts!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Great informative post.  I personally believe we are entering a time where assessed values may go below fair market values.  Towns and municipalities over estimated the value of rising real estate to fund their budgets.  Very poor planning.  They do not want to let go of those dollars, and will resist reappraising the properties worth to keep money in the kitty.  I am afraid this has occurred across the nation.  Home owners need to fight for their rights now more than ever.

Posted by Jim Crawford, Jim Crawford Atlanta Realtor - Atlanta Real Estate (RE/MAX Paramount Properties) over 5 years ago

Thanks Jim. Your statement here are on the money of course. I am not sure how it works in Atlanta but here is Massachusetts the assessment as sure to come down as the re-assessments are done for this coming year. This is all of course semantics because all these town have a budget and need to bring in those dollars necessary to run their respective towns. The adjustments will be made by increasing the tax rate to off set the lower assessments.

In respect to home values people need to understand that the assessed value is almost always lagging behind what is happening in the Real Estate market. The assessed value placed on a home also can vary based on land size and things such as outbuildings, a pool ect. All these things can add to an assessment but may not have a corresponding value in terms of what a buyer would be willing to pay for the property.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

:) LOL...sorry but thats very funny!  The county is giving people x amount of days to provide evidence of land use and such! 

Posted by Midori Miller, Homes In Fort Lauderdale, Real Estate Training - R (Better Homes Realty - BH Referral Associates ) over 5 years ago

Midori - The jokes on us. That is one of the reason people pay so close attention to their homes tax bill. The taxes on a home here are out of site. I pay close to $13,000 a year on the taxes for my home!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

I have tried appealing the property taxes on my home since the assessed value was higher than what we bought it for...no luck since the assessed values were based off of 2006 comparable sales.  Very informative for homeowners.

Posted by Patricia Beck, Colorado Springs Realty (RE/MAX Properties, Inc., GRI, CDPE) over 5 years ago

good info, and you are right assessed is rarely the same as actual , and now it is rarely the same on the downside (the assessed is probably too high)

Posted by James Wexler (wexzilla.com) over 5 years ago

Patricia this is a common theme you here all the time in regards to abatements. There a different rules for different states but it not uncommon at all to hear a denial of an abatement request based upon the time frame of when the assessed data was used.

James - I have never been able to find any ryme or reason to a homes assessed value. I have seen two similiar homes side by side built by the same builder and the home with the smaller square footage and lot size is assessed higher than the bigger home. Did the home owner in the smaller home file for an abatement at some point and get their value dropped? Who knows but in many circustances it causes you to pause and wonder.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

This could be a whole new can of worms this year and next.

Posted by Susie Blackmon, Ocala, Horses, Western Wear, Horse Farms, Marketing over 5 years ago

This is an excellent explanation of assessments and what an owner can do if the assessment is too high for the market!  The trick now is to get a handle on the market value!  I know several appraisers who are struggling with this every day!  However, an appraisal may be very persuasive evidence of the true market value.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 5 years ago

Susie it will only be a can of worms for the home owners who think their tax bills will be lower because of falling assessments. Of course lower taxes are does not roll of the tongue easily in Massachusetts.

 

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Joan - Thanks for the compliments on my article. In most circumstances an appraisal would probably go further than a broker price opinion as they are certified and we are not. That would be a rant for another day though.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Hi Bill...You did a great job explaining the process in Massachusetts.  Congratulations on the feature.

As we all know, things not only vary from state to state but from county to county.  Fortunately I am in a more rural area where many property owners feel pretty comfortable questioning their assessments.  That's not to say that many get changed.

Kate

Posted by Kate Elim, Realtor 540-226-1964, Selling Homes & Land at LA (Dockside Realty) over 5 years ago

Hi Bill - The same for RI. Good post lots of info.  Good Point - "Things written in the Multiple Listing Service (MLS) like "What a bargain this home is priced X dollars below assessment." Most of the time the Realtor is making a very poor correlation between the assessed and market value." - never was a big fan of this advertising.  Happy New Year

Posted by Lisa Glowacki, Real Estate Broker - RI & MA (Lisa Glowacki - Rhode Island & Massachusetts) over 5 years ago

Thanks Kate. I know there is quite a variation of how this process works from state to state.

Lisa - This type of marketing has always been a pet peeve of mine because it is written like you are doing the buyer some kind of favor by placing the home way under market value. It really is a silly statement that does nothing for the seller.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill, as always, great timely and useful information.  I know the whole assessment value is a big mystery to most folks and this puts a lot of that mystery aside and replaces it with valuable info !

Posted by Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate (Realtor / Owner - RE/MAX Access) over 5 years ago

Chris & Stephanie -  Thanks. The whole assessment v.s market value correlation would make the top ten Real Estate myths list:)

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

In New Hampshire the assessments are all over the place and different from town to town. Which makes it very confusing for the public and even REALTORS!

Posted by Monika McGillicuddy, Southern NH & the Seacoast Area (Prudential Verani Realty/Hampstead) over 5 years ago

Oh, I wish our tax values would go down they way home prices have! That would be a nice New Years present! LOL! It is great that you were able to articulate the difference between assessed value and market value. I think I will have to print out a copy of this article (maybe insert Nevada where your use Mass.)haha) and show it to clients and, more importantly, family members who insist I do not know what I am talking about!

Happy New year!

Posted by Terrie Leighton, Reno Real Estate Agent (Ferrari-Lund ~ Reno's Premier Real Estate Company) over 5 years ago

Fabulous work on the article, Bill. It helps pre-explain an objection to proper pricing, as well.

Posted by Wendy Rulnick, Destin FL Real Estate (Rulnick Realty, Inc.) over 5 years ago

Bill - as one who has challenged my own and others assessments ove the years it's interesting to seee some of the differences in other areas as to the process.

Posted by Barrie Clulow (My Time Is My Own) over 5 years ago

Monika -  It works much the same way here in Massachusetts as well. I am constantly amazed when I look at assessed values. There is no ryme or reason as to why some homes are assessed the way they are in realtion to other homes.

Terrie - If we could all get that lucky it would be great:)

Wendy - Thanks for the compliments on my article.

Barrie - I would have to agree with you. I have learned a few things already from some of the comments of others living in other areas around the country.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill, I really wonder how many people actually do not know this very fact. Good information.

Posted by Danny Thornton, WordPress Guru (R & D Art) over 5 years ago

Hi Bill,

Excellent info for consumers in Metro-west MA, or anywhere for that matter in your state. You are so right in your analysis that assessed value and market value should not be confused. We have a similar issue here also in SoCal.

Right now many existing owners are going through the appeal process to reduced their taxes too.

Posted by Lynda Eisenmann, Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co (Preferred Home Brokers) over 5 years ago

Bill- Here in Florida you can not use the assessed tax valuations for comps on market value. One has nothing to do with the other. Many people here have not even gone down to get their assessments reduced because of the fall in the market. This is sometimes difficult to get buyers to understand.

Posted by Nestor & Katerina Gasset, Realtors, Wellington Florida Homes For Sale (International Properties and Investments LLC) over 5 years ago

Danny - There are plenty believe me. I am constantly educating my clients as to how assessments work and the fact there is very little correlation to a homes market value.

Lynda - It will be interesting to see how the new evaluations look for this year. There will be a lot of complaints I am sure when people realize it will mean nothing for a tax break.

Katerina - I never even give them a 2nd thought when I am evaluating a property here in Massachusetts either. There are plenty of home buyers and sometimes Realtors too that don't realize there is a difference.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill -- THANK YOU for writing this post.  Now that many home buyers are internet savvy, I see so many clients checking the tax assessors site to view the assessed value of the home to determine an offering price.  As you said, "assessed values are nothing more than a yard stick for a municipality to collect an appropriate amount of taxes" -- Assessors cannot possibly keep up with a market that changes monthly -- and sometimes weekly.

Posted by Kerry Lucasse, Your Nest Atlanta Real Estate Consultant (eXp Realty - Nest Atlanta Team) over 5 years ago

Bill, You do a wonderful blog.  I have done so many abatements on my own home and I am about to do another.  Thank you for all the info.  You are a terrific blogger.  Best to you in '09

Posted by Pat Laracy Baker, Realtor, Green, ABR, Needham, Massachusetts (Key Advantage Realty ) over 5 years ago

Kerry that is one of the biggest Real Estate mistakes there is. If I was writing a top ten list for the biggest Real Estate myths the assessed v.s market value arguement would be right up there.

Pat - Thanks a bunch. So I assume you have had some luck with the abatement process? Good luck with your abatement request.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill- Do Bob Bushway a favor: print this out and post it down in the Assessor's office at town hall.  I think you're right that we'll be forever fighting the battle with consumers about market value v. assessed value.  The killer is that once in a while you'll have a comp that actually did sell around assessed value and then the homeowner or buyer is convinced the correlation exists.

Thank you for another very useful post!

Posted by Kathleen Buckley, Hopkinton Specialist (STAR REALTY Hopkinton) over 5 years ago

Kathleen - For the most part I think Hopkinton does a fairly decent job of getting the assessed value at least in the ball park of FMV. There are many other local towns that are way off. You are right that on occasion there will be a home that sells very close and people will try to draw conclusions from that. It is pretty easy to convince them otherwise though when you roll out a long list of sold properties that are either much higher of lower than the assessed value.

Heck we both know there are many who do fight the assessment and win. They get their value lowered and the rest of the neighborhood is scratching their head when they start to compare their home against that persons property.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

You know people who have gotten their assessment lowered?  Heck I tried to go in claiming, "Yeah, maybe I have 1.5 acres but with the wetlands and all..." Bob cut me off with, "Oh don't give me that wetlands argument, 50% of the town could claim the same thing.  Scram."  (Well, he was a bit more polite but not much.)

Posted by Kathleen Buckley, Hopkinton Specialist (STAR REALTY Hopkinton) over 5 years ago

Cities need their tax money so they aren't lowering the assessed values too much here in Metro Detroit

Posted by Russ Ravary, Metro Detroit homes - Michigan Real estate & Mortg (Keller Williams Commerce) over 5 years ago

Great information, Bill, for your local readers.  We have prop 13 out here in California.  I have a friend who called recently trying to understand why her home taxes went up when values are down.  What she didn't realize is that she bought about 12 years ago, and her tax basis is still lower than market value!  Municipalities, like everyone else, need their revenue!

Posted by Carol Lee, Realtor - Agoura, Oak Park, Westlake CA Homes (Dilbeck Real Estate) over 5 years ago

Kathleen I am not saying it is a regular occurrence but I do know a few who have managed to get them lowered. Obviously you would need to present a real strong case. If everyone in town was at Bob's door step and he was lowering the assessments further the town would be in big trouble as they would not have the revenue needed to operate properly.

I think you would have a better case if you were being assessed higher than all the other like homes in the neighborhood.

Russ - I have not seen the latest assessments but I expect them to be lower but not by the same amount that the market values have actually dropped by. It will be interesting to see the adjustment although, I know if will not mean lower taxes as the tax rate will surely rise.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Carol the same thing happens sometimes here as well. Some of the homes that sold years ago will have lower assessments if they have not resold during the time that the market was booming.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill great information.  Everyone like the ride up but not when it is coming down.  The public tend to beat up the Assesor glad you clarified his position.

Posted by Jennifer Fivelsdal, Mid Hudson Valley real estate connection ( JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571) over 5 years ago

Jennifer  - Thanks. I am sure there are many local assessors that are taking quite a beating:)

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

This is such an issue in so many areas.  We have so many homes here assessed higher than they are worth today.  Just like when gas went up in price recently, we saw that same spike in food - yet the gas prices are down and the food prices have stayed up... We have some catching up to do that's for sure!

Posted by Jason & Amber Gardner, REALTORS, Sherwood and SW Portland Real Estate (The Hasson Company) over 5 years ago

Ours never match the market value...nothing more than ...'this is what the city is assessing your property for purposes of taxing your property'.  During the boom it was thousands lower...then higher....and now it's ...well, ho hum. :)

Last year they doubled our exemption...from 40-80k and on and on by age...in the end I got a refund check for property taxes (the escrow account with my mortgage co)...never saw that before. :)

Posted by Celeste "SALLY" Cheeseman, (RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE (Century 21 Liberty Homes) over 5 years ago

Bill.... what a very worthy feature.  This is information that should be publically shown often because yes, so many are confused about the differences.  Great job here...

jeff belonger

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 5 years ago

We have been luck here that our values seem to hold steady

Posted by Roland Woodworth, Short Sale and Foreclosure Resource- SFR - Clarksv (Keller Williams Realty) over 5 years ago

The assessed tax value is so different than the actual price a buyer is willing to pay.  This is a good post to illustrate this difference.

Posted by Morgan Evans, LICENSED REAL ESTATE SALESPERSON (Douglas Elliman Real Estate) over 5 years ago

Timely article, Bill.  The same thing is happening in the Chicagoland market.  Our team has been doing quite a bit of this trying to help our clients protest the assessed value.

Twitter

Posted by Kris Kombrink ~ The Kombrink Team (RE/MAX Excels - Chicago's Western Suburbs) over 5 years ago

Amber & Sally you both have confirmed the same message as far as your markets go...the assessed value and market value are rarely the same.

Roland - That is good to hear.

Morgan - That is a common theme for many areas around where I work. Most of the homes right now are assessed much higher than their value.

Kris - I would imagine that may be pretty time consuming?

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Jeff - Thanks for the compliments on my article!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill -- South Carolina just (this past year) implemented a "point of sale" assessment -- ie. house is currently assessed at $375,000 and sells for $450,000 (not uncommon) the new assessed value is $450,000 - Which is a complete nightmare!!  Even with the decline in the market if you wanted to downsize there is a good chance your tax bill on a smaller home will be more than the home you are moving from!

Posted by Jason Ellis (Coastal REO Solutions - Myrtle Beach Short Sales & REO's) over 5 years ago

Jason - At least the assessments are uniform and not all over the place.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Bill - I know a fair amount of people who have tried to have their properties re-assessed, and taxes lowered. In California, that can be done by contacting the tax assessors office.

Wishing you and your family a happy, healthy and prosperous 2009!

Posted by Sharon Paxson, Newport Beach Real Estate - HOM Sotheby's Int'l Re (HÔM Sotheby's International Realty, BRE License 01501912) over 5 years ago

This is a very well-written and timely article. For years...here in my area...tax values were usually significantly lower than market value. Buyers often asked me why they were paying more than tax value for the home. Now...it is common to see to listed prices significantly lower than tax values. Funny...buyers are not questioning why they are paying less than tax value. :-) 

Hope you had a GREAT CHRISTMAS! Happy 2009!!! ~GBU~

Posted by Elizabeth Nieves, Bilingual Raleigh - Durham North Carolina Real Estate Team (The Elizabeth Nieves Realty Group) over 5 years ago

Sharon - there are always people trying. Probably a lot more this year than in the past.

Elizabeth - Thanks a bunch. For the most part assessed value was in the ball park but right now there is a bigger disparity between assessed and market value.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

thanks for the linked in link over!  I was able to successfully argue this one with one of our counties last year, by showing comps and letting the assessor actually come to the property for walk through.  This county chose to bring "water" properties up to par with a county closer to the metro area than we are, just about the time the market tanked.  Has hurt many, many people at a bad time.  We were able to reduce the new assessed value by over 30K, which helped just a bit on the taxes.  In-town homes, no arguing, no reductions so far.  They tell me 2010 will be the first time we may see some softening in the stance.

Posted by Vicky Frieberg, Rush Point Realty LLC over 5 years ago

Vicky - Glad you were able to find my article via LinkedIn. It sounds like you did a pretty good job for your client getting their assessment down!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Excellent advice.  I had my county RE taxes reduced.  I also sent letters to all buyer who had purchased in the past 3 years and advised them to appeal their RE Tax.

Good reason to contact old clients.

 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 5 years ago

.....and just as frustrating are states like Texas which assesses in arrears.  Our market exploded last year, thus our taxes did this year after the market imploded.  Well, I guess it will be something to look forward to next year....

thx.

Posted by TIM MONCRIEF, $44,530,000 2013 Production (breg) (Bartlett Real Estate Group, llc) over 5 years ago

Bill, I have suggested to every buyer that has purchased a home recently to closely check their tax bill this year.  Thanks for the reminder to check my own.

Posted by Kay Van Kampen, Realtor®, Springfield Mo Real Estate (RE/MAX Broker, RE/MAX Solutions) over 5 years ago

I was listening to the news radio in my area today and they were saying the tax assessors office in MD is using values from 2005!!  We are protected by a phase in system.  It takes 3 years for the tax values to go up, but it also takes 3 years for them to come down to the new assessed values.  Down is used loosely when it comes to taxes coming down!!  Great article.

 

Posted by Audrey June-Forshey, GRI, Gaithersburg, MD (RE/MAX Realty Services) over 5 years ago

Lenn but how many of them will actually get any relief. Here in Mass it is pretty tough because it is all a function of needed revenue.

Tim - Sounds like your assessments follow the market pretty closely.

Kay - Your welcome:)

Audrey - Wow three years is quite a long time to wait. Things can be drastically different in that long a time frame!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Great info here Bill...very helpful explanation about assessments. I, fortunately, live in one of those less common states where tax value is assessed on land USE...which means people can invest in land and own it for pennies a year...Can I interest you??? ;-)

Posted by Mara Hawks, Inactive-2012 REALTOR - Homes for Sale Auburn Real Estate, AL (First Realty Auburn ) over 5 years ago

Around here, assessed value is even less reliable.  We have had a law in effect since the late 70's that only allows the assessed value to increase by 2% each year even when we were seeing double digit increases in value. So, if people have owned for years, despite the way values have decreased, the assessed value may be way under value.

On the other hand, for those who bought in the last few years, they can be way over in their assessed value and need to ask to be reassessed.

This is important information for consumers.

Posted by Christine Donovan, Broker/Attorney 800-610-7253 DRE01267479 - Costa M (Donovan Blatt Realty) over 5 years ago

Mara that sounds like a pretty good deal to me! We pay a lot of money in taxes to live in our homes here in Massachusetts. I just got my tax bill and it is going to be over $13,000 for the year.

Christine - It sounds like over time it works out better for you since Real Estate over time does appreciate.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

I think this is true in most areas. Actually we have areas that assessed is higher and areas where it is lower.. kinda crazy!

I hope that your 2009 is just fantastic!

Happy New Year!


your friend in Charlottesville!

Posted by Charles McDonald, REALTOR®, Blogger, Principal Broker®, Owner (Charlottesville Real Estate Solutions) over 5 years ago

Bill, excellent discussion on this topic which I explain to sellers and buyers that look up the county tax roll values all the time and want to know how that varies from market value.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) over 5 years ago

Thanks Gary. The assessed value and market value are often confused with buyers and sellers. Hopefully this article cleared some of the confusion.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

What an awesome blog!!  Unfortunately this is happening all over the U.S.  Very informative!

Posted by Tami Vroma, Realtor, Grand Rapids MI Real Estate (West Michigan Real Estate Specialist-Five Star Real Estate) over 5 years ago

Bill:

In a declining market assessed values exceed true value. This is a problem the local tax assessors face as people look to get a reduction. Although taxing is to based on equality, sometimes it is when it is being measured that makes a effect.

Richard

Posted by Richard Stabile, Bergen County New Homes Builder Realtor (REMAX real estate associates) over 5 years ago

Bill, this is an excellent post on assessed home values! Very informative!

Posted by Jeremy Blanton (210 Consulting~ Social Media Advisors) over 5 years ago

Tami & Jeremy - Thanks for the compliments.

Richard - Very true. In Massachusetts when we are in an environment where the assessments are dropping the tax rate will be on the rise.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Great information for the public since they often think the assessed value is the market value.  FSBOs often make this mistake.  Good job as usual.

Posted by Shirley Parks, Broker, 210-414-0966, San Antonio TX Homes (Sands Realty 210-414-0966) over 5 years ago

Shirley - You are correct I have seen FSBOS make this mistake often especially those that have not consulted with a Realtor.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

True this!  I spent about an hour with a county appraiser on the phone so he could tell me how they do it.  I still don't get it but was greatful he could spend the time :)~

Posted by Renée Burrows, Las Vegas Real Estate Broker - www.urLVhome.com (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 5 years ago

This is one of the most misunderstood concepts in the business.  I can't think of any client in years who hasn't at some point asked why assessed value is "so low".  Here in Lancaster County the Assessments have run about 60-75% of market value.  That's because our assessments only adjust every 7 years per statute.  One of the ways a pro in the county guages the "crap factor" of a prop is how close the assessed value and asking prices are...

Posted by Jeff R. Geoghan, Marketing VP & Real Estate Agent Trainer (Coldwell Banker Select Professionals) over 5 years ago

Bill,

At least in my area, This declining market is making appraised values higher than what a home is selling for.

There was a time that it was the opposite, as I am sure you know.

Posted by Marlene Pellegrini over 5 years ago

Marlene that sounds very strange why would appraisers be coming in at a higher value than what the home is selling for? Do you mean the assessed values are coming in higher?

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Here in Florida the "comps" are usually for the last 2 years, so assessments are slow to fall. Also, since we have "Save Our Homes" caps, in cases where owners have been "saving" taxes for years, their taxes may still be going up while market values are going down.

Posted by Sharon Simms, St. Pete FL - CRS CIPS CLHMS RSPS (Coastal Properties Group International) over 5 years ago

Sharon as far as taxes on homes you guys have it pretty good down in Florida. Taxes are a killer here in Mass!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Hello Bill, this is a GREAT post about Tax Assessed Home value vs. fair market value.  I spend a lot of time explaining this to Buyers, who usually start off very confused about the subject.  Thanks for sharing such terrific info!!!

Posted by Vickie Arcuri, Realtor - Ft. Lauderdale Waterfront Homes (EWM Realtors- Esslinger-Wooten-Maxwell, Inc.) over 5 years ago

This is a great post.  Assessed value can be very out of whack with current market value around here.  If a home has been owned by one person for years and years, assessed value may be far under fair market, and it can be hard to make buyers understand that.  Homes that have fallen into disrepair may be marketed for considerably less than assessed value.  It can be really strange.

Posted by Brenda Carus (Century 21 Zwygart Real Estate) over 5 years ago

I have had buyers inform me of the assessed value and thinking this should be the FMV.  The assessed value can be higher or lower than the FMV, but normally lower in our neck of the woods.  In this deflating market, the number of owners filing for reduction has increased 700% over the past two years.

Posted by Chris Olsen, Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty) over 5 years ago

Vickie it is funny how if the assessment is low the buyer will try to use it as an arguement for why they made a low offer but you never hear anything when the assessment is high?

Brenda - I see the same thing all the time on homes that have not changed hands. It is easier for as assessor to come up with a value when they can see that the home has sold recently for X.

Chris - Assessed values are all over the place here in Massachusetts. Frankly I never even look at them other than to know what the taxes on the property will be.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 5 years ago

Great Post Bill as are all of your posts!

I used to live in Massachusetts. I am lucky enough to be lising on the coast of SC about 30 minutes south of Myrtle Beach, in Pawleys Island.  But I still own property in Massachusetts, this was a great reminder for me to try to get my tax situation changed and appeal my current rate.

My property is in Worccester, the Greendale section. I don't think things have gotten any better over the last few years in the market though I would like to sell.

I will keep you in mind for referrals!

Thanks again!

 

Posted by Joanne Gillet, Buyer & Seller Consultant/ Educator (Pawleys Seaside Realty, Pawleys Island SC) over 4 years ago

Bill~

I'm sending this on to clients. It not only is an informative explanation of assessments , but offers suggestions about what property owners can do if the assessment is too high for the market.

Built in to the equation:   Accurate sleuthing as to the market value! 

Posted by ASHEVILLE 1031 SIGNATURE PROPERTIES specialists in - LAND,INVESTMENT ACREAGES, AND LUXURY HOMES, Tell Us What Is Most Important to YOU (Signature Mountain Homes and LAND- Asheville 1031 Realty, Inc.) over 4 years ago

What goes up must come down, right?  Well, except for property taxes.  Here in Oklahoma, especially in central Oklahoma/Cleveland County I am seeing really higher millage rates which are pricing some buyers out of certain homes because the monthly tax escrow are just too much to bear so they might buy a less expensive home which in reality will have higher taxes in the years ahead.

I think the way they assess and raise our taxes is flawed and I would like to see something done about slowing the tax rate down to help everyone out. My thinking may be way off base but one of the most common complaints I hear across the board comes from owners and their property taxes.  They're just too high.

Posted by Russell Benson (Prudential Alliance Realty-OKC, OK) over 4 years ago

Bill, Florida assessed values are now more than market value. Our system is based on arrears values. Foreclosed properties without homestead have very high taxes and the entire system is a bit of a mess. Its extremely confusing for buyers to understand. Hopefully by 2011 we will have hit the bottom and there should be enough homes that have changed ownership where the general values will be more consistent. We have seen may people go to the county to argue their values. Good info to have posted on the web site

Posted by Sanna K. Thomas, PA GRI, E-Pro, SFR, AHWD, LH Ocala Florida Luxury (Sellstate Next Generation Realty) over 4 years ago

How interesting to read through all the comments and learn how, state by state, we are all governed so differently.  Florida still remains a bargain, tax wise.  Having escaped Long Island 19 years ago we couldn't fathom the difference in tax structures.  Bill, your post was written at the end of '08?  What's the update on your tax sitiation.  Where our market peaked near the end of '06 we've had a free-fall property value ride ever since.  Approaching bottom?  Not sure yet.  The neat news here is that sales are of public record immediately and as such, our comps are pretty current.  Our county's tax assessor has traditionally been 1.5 years behind but catching up.  Of course, Florida's homesteading allows for a 3% cap on taxes in any given year.  Now the home next door without homesteading....

Posted by Anonymous over 4 years ago

As of March of 2010 it looks like we may be nearing a market bottom although it is anyones guess for sure. In regards to the question of what has happened over the last few years with our market values we were still on a downward slope. At the moment the 1st time buyer market is doing very well. The upper end luxury market is still very weak and still seeing price reductions in order to move homes.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 4 years ago

It's also important to remember that the tax rate affects the amount of taxes paid even when there is a disparity of market value versus assessed value. The best way to control that point is in the voting booth, and to be conscientious that who we vote for in county elections determine how much tax we pay. 

Posted by Carol McCarthy, ABR (Realty World Select) over 4 years ago

Thank you for posting this.

I am a Broker and have been in the business for 41 years now (I started when I was 4 - LOL). I have been trying to explain all this to agents, buyers, sellers, attorneys, you name it, for years now - some get it, most do not. Personally I do not see that the information and procedures are all that complicted.

I also consider it to be such basic information pertaining to our business that each and every agent should know this inside-out and how to properly explain it to any ley person.

 

Posted by Frank D Coon (CareFree Realty, Inc. / CareFree Homes & Realty, Inc.) over 4 years ago

This post was well written & makes a great point.  I see listings all the time that state "selling below assessed value".

It's just not true!

 

Great job.

Posted by Jeff Coon, Direct Mortgage Lender (Annie Mac Home Mortgage) over 4 years ago

I guess we are kind of lucky in our area. Some cities are actually reducing the assessed values of homes without the owners having to do battle with them. But, the taxes being collected hasn't gone down. We have a tax system which has two values, one is the assessed value and the other is the taxable value. The taxable value lags behind the assessed/market value based upon the rate of inflation. Taxable value cannot increase more than the rate of inflation or 5%, which ever is lower. So our assessed value may go way up in good times and lots of sales etc, but taxable stays slower and lower. UNTIL...some one new buys the home then taxable is raised to match assessed value....a huge jump sometimes, especially if the seller has been in the home for a long time and the taxable has really lagged the assessed value. They did this to prevent owners from being unable to afford their home when taxes were going up at a rapid rate when home prices were sky rocketing. The collected tax will still be based on the taxable value and it can go up until the taxable and assessed finally match up ....So when you buy a home here, base your taxes you expect to pay on the price you pay for the home or assessed value, not the taxes the sellers are paying....could be a big difference.

Larry Mennetti, Grand Rapids, Mi

Posted by Larry and Marilyn Mennetti (FIVE STAR REAL ESTATE) over 4 years ago

Hi Bill,

My home is worth about half of what it was a couple of years ago, and my property tax went up!!! I guess that's California for ya'.

Posted by Michael Cole (CPG Tours) over 4 years ago

Being a Mortgage Broker and a Homeowner, I get calls on these issues weekly.  I just received my Livonia Assessment and WOW my taxable value wnt down by $336.00. Thank you Mayor Kirksey and the rest of the great administrators in Livonia MI.  Also I own a second home in Luna Pier and the taxes went down a few buck.  What a pleasant suprise these days when everything (except our home equity) is going up.  Most people have not realized what they seen on the assessment.  Look closely it is in BOLD.

It was very easy for the Municiplaities to raise assessed values when the market exploded.  They reaped hugh revenues. For those Cities that refuse to budge, what goes around comes around. 

I owned a couple properties in Detroit and they NEVER adjusted value when all the data was there.  Well that is why many are leaving the city and coming to cities that are fair and equaitable.

Good luck to all that fight their assesments! May you win the battle :)

 

Posted by Debra Ananda over 4 years ago

I work out of the 2nd largest county in the U.S. and inept and crooked are some of the more lighthearted words I can use!  Assessments here are coming down with prices sometime over the next couple of years which doesn't seem to be fast enough for most homeowners. Good post that gives the homeowner valid advice & direction.

Posted by Lyn Sims, Schaumburg Homes (RE/MAX Suburban - Schaumburg IL Real Estate - Northwest Suburbs of Chicago) over 4 years ago

Thanks for the solid direction on real estate taxes!

Posted by Fred Sweezer Sr., Certified Home Inspector (Property Inspection Services) over 4 years ago

Bill, terrific blog post on tax assessments. We built our home here in Lewisburg WV in 2005 for $620K it is assessed at $540K.  Real estate taxes are not as bad as compared to Mass....WOW, you pay $13K a year in real estate taxes...ouch mine are $4,480. I couldn't afford to live in Mass.

Posted by Rebecca Gaujot, Realtor®, Lewisburg WV Real Estate, Greenbrier County (Coldwell Banker Stuart & Watts Real Estate) over 4 years ago

Our Assesor in this county has been pretty good about taking the Assesments down with the property values declining.  Oddly there seems to be a lot of scandal and investigation directed at him at this time too.  He is not popular with other elected officials.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 4 years ago

Bill - It's great to see others here in the rain who understand the process and the fact that it is not perfect.

Posted by Kathy Clulow, CNE - ASP - SRES .... Uxbridge Ontario Real Estate (RE/MAX All-Stars Realty Inc. Brokerage) over 4 years ago

For this to be old information, it is so dead-on, and necessary for people to get it, especially now.

Posted by William James Walton Sr., Greater Waterbury Real Estate (WEICHERT, REALTORS® - Briotti Group) over 4 years ago

Great direction on where to go to contest and the differing definitions. Love AR for the knowledge of others!

Posted by lori over 4 years ago

South Carolina just went throught major debate on our property tax law.  It was resolved... sort of.  I am not sure if it really benefits anyone.

Posted by Aaron Silverman, Improving the Real Estate Experience through Educa (Bluewater Property Management, LLC and Lowcountry Turnkey Properties, LLC) over 4 years ago

Bill, I love succinct. Knowledgeable and succinct is even better. Thanks for the info and several terrific, helpful quotes!  I'll be sure to credit you..  

Posted by Deborah Fox (Villager Realty Inc ) over 4 years ago

I'm filling out the NJ paper work now, Bill. Assessed at $308,700 - which was over by more than 10% at the height of the market, but less than the 15% they are allowed by law to be over or under. My CMA is at $223,000 with five good comps (you are only allowed five but need at least 3). Zillow type of estimate puts the house at $258,000 which you are not allowed to use or bring up during your hearing. You can fight it yourself, yourself with an appraiser, or, hire an attorney - real estate agents are not allowed to say boo unless called upon by an attorney as part of his "expert witness" however, the board is only required to hear testimony from a licensed appraiser.

Posted by Gregory Bain (Mezzina Real Estate & Insurance) over 4 years ago

Hi Bill,

I would agree that too many agents make statements trying to correlate assessed value with market value.  As you stated, the two have nothing to do with each other!  It was nice of you to outline the abatement process as many people don't realize how easy it is to do OR how to go about it.

Posted by Catherine Condon, Pepperell MA Homes - Middlesex County - Hillsborough County (Short Sales - Integrity Residential Brokerage) over 4 years ago

Bill and others,

It's probably very similar in most parts of the country with regard to the correlation (or lack thereof) between the tax assessment value of a property and the market value.

We had a semi-revolt here in NW Arkansas because in the most recent reassessments (which occur every three years) the assessed value for tax purposes was higher than the market value in many cases. We have had declining values from a few years ago when taxes went up big-time to approach market value. Properties were also appreciating (in terms of market value) by double digits. When the market turned and prices started declining, the reassessment occured, but the assessors didn't take thathe declinet into account.

We have 2 different counties in NW Arkansas which were affected in this way. It's interesting because each county handled the problem differently. Washington County actually made some downward adjustments in certain areas without people having to appeal their reassessment. Benton County largely stood firm with their higher assessments but also then had to bear the brunt of severe criticism in the media as people protested their assessments. They finally caved in many cases as well, but it was on a case-by-case basis.

Each county does have a procedure for people to protest tax increases, just as exists in other parts of the country.

 

Posted by Judy Luna, Technology with a Personal Touch (Keller Williams Market Pro Realty) over 4 years ago

Here in Oregon our property taxes are based on assessed values, not real market value. The assessed value can only go up 3% a year. The gap between real market value and assessed value is usually quite large. This system keeps our property taxes from skyrocketing during boom times. No one likes to pay property taxes, but at least this keeps them under control.

Posted by Wayne B. Pruner, Tigard Oregon Homes for Sale, Realtor, GRI (Oregon First) over 4 years ago

It's funny. This is an old post but still very relevant. It's also funny to see that this ratio is a question across many states and towns.

Posted by Beverly of Bev & Bob Meaux, Where Buying & Selling Works (Keller Williams Suburban Realty) over 4 years ago

Thanks again everyone for all your comments on assessed value v.s market value. There will always be folks that do not recognize their is a difference.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 4 years ago

Most of our assessed values have been adjusted down since the market decline, and typically come in around 80% of the market value.  Great post, though.  Very informative for buyers who are unfamiliar with how tax assessments work.

Posted by Matt Robinson, www.professionalinvestorsguild.com (Professional Investors Guild) about 4 years ago

Thanks Matt I appreciate you compliments on my article about assessed value vs fair market value.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) about 4 years ago

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