As a Massachusetts Realtor who has been around the block a few times, I often come across things written and said by other Realtors who want to make me scratch my head in disbelief.
All this head-scratching could partially explain why I started to lose my hair at such an early age!
One of the biggest myths in Real Estate, at least in Massachusetts, is that a home’s assessed value correlates to its present market value.
Unfortunately, it is easy to see why the general public is often times confused about this because many Real Estate agents fail to educate their clients that there is a big difference. Trust me, looking at assessed values is no better than using Zillow.com to figure out what a home is worth!
When the assessed value from the town is higher than what a property is on the market, you will often see Realtors writing advertising that says, “Come see this bargain home that is priced $75,000 less than the assessed value”. This immediately tells me that the Realtor either does not know anything about property valuation or thinks there will be someone foolish enough to believe the home is a steal.
Someone who knows better will think the property has been over-assessed by the town, and the seller has been paying too much in taxes!
Of course, on the other side of the coin, you will see home buyers who see a home listed higher than the assessed value and, if their buyer’s agent has not appropriately educated them, will improperly use this as part of their negotiations when making an offer.
If more people were better informed, they would know that tax assessments are worthless when evaluating what a property is worth.
Assessed Value is Not The Same as Fair Market Value
When home values drop, many people think their tax bill will also be lowered. If people misconstrue that assessed values and fair market values are the same, they will automatically come to this conclusion.
In theory, this should be the case, but assessed values are a yardstick for a municipality to collect an appropriate amount of taxes to sufficiently cover the state and local appropriations chargeable to the city or town.
A property’s assessed value often lags behind the market because the valuations are not re-calculated until the beginning of the following calendar year. So if the market values of homes are dropping, it is not unusual to see the assessed value being higher. Likewise, if values are rising, it could be the opposite.
Assessed Values Are All Over The Map
Over the years, I have seen some of the strangest things regarding assessed home values. Believe it or not, I have seen some homes that are as much as a couple hundred thousand over or under-assessed compared to their sales price.
I have seen two homes built by the same builder side by side where home “A” had more square footage and a more considerable lot than home “B,” yet home “B” was charged more in taxes due to a higher assessed value. Mind-boggling, don’t you think?
I have also observed that a home that has re-sold more recently will usually have a more accurate correlation of its market value compared to its assessed value than a home that has not sold in a long time.
For example, a home that sold three years ago, more times than not, would seem to have a more accurate correlation than a home that has not sold in ten years.
Yet another example is the homeowner who feels they are being over-assessed by the town and decides to challenge and wins an abatement. Their assessed value is now reset to the lower value.
Does every other homeowner with a similar property get a notice in the mail saying their home’s assessed value will also be coming down courtesy of the research done by Mr. Jones next door? Fat chance, amigos!! This is the case of the squeaky wheel getting the grease.
Appraised Value vs. Assessed Value
Another area of confusion is with appraised values. If you have had a recent appraisal of your property, don’t think for a minute that will have any bearing on your property assessment. It won’t.
Assessed values are different from appraised values, just like they do with fair market values.
What to Do When Your Assessment is Different From Similar Homes
So what are you supposed to do if you think your assessed value is out of line with other homes in your neighborhood or town?
You should head to your local assessor’s office and file for a tax abatement! All the information necessary regarding the application process and the deadlines for filing should be made available to you.
Applications for abatements are due on or before the due date for payment of the first actual bill. The town’s assessor has up to three months in Massachusetts to approve an abatement request.
If you are denied your abatement request and do not feel that the assessor made the proper ruling, you have the right to appeal to the State Appellate Tax Board.
Final Thoughts on Assessed Value
In summary, an assessed value is a valuation placed on a property by a public tax assessor for taxation purposes.
Fair Market Value, on the other hand, is the agreed-upon price between a willing and informed buyer and seller under usual and ordinary circumstances.
It is the highest price the property will bring when exposed for sale on the open market to a buyer who is purchasing with full knowledge of the property’s highest and best use.
About the author: The above Real Estate information on Massachusetts assessed values vs. fair market value was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at email@example.com or by phone at 508-509-4867. Bill has helped people move in and out of many Metrowest towns for the last 36+ Years.
Thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.