Profile picture for anil_m99

Sale Price Vs Assessed Price:

How close should the Sale Price be to the Assessed Price? We are looking for a house in a town and this particular house is offered at a much higher price than the assessed price. How do I know, that the seller is not try trying to upsell
  • June 29 2012 - US
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Answers (6)

Profile picture for user74474305
Paul, There is an Assessed Value (what the city says its worth after applying their own formula); the Appraised Value (which is determined by a licensed appraisor using his own formula & required by your mortgager who will not loan you $ higher than the appraiser's amount); and the Market Value (what the selling realtor thinks the house should sell for based on the real estate market for similar homes in the same neighborhood). The 3 values can differ considerably. The property taxes here are figured on the Assessed Value; an estimated tax report is mailed to you early, so that if you do not agree, you may appeal it. Then the school tax is added, and exemptions deducted before u get a final tax bill. In FL, we have a $25K exemption (deduction) on the 1st $25K of the assessed value, a $25K exemption on the 2nd $25K assessed value, plus as in my case, a $25K exemption for low income senior, & another exemption as a widow. Needless to say, my taxes are very low, and were they published with my for-sale ad, the tax amount, however correct for the previous year, would be very misleading for a potential buyer. You can estimate how accurate for you the published taxes in the ad would be by knowing if the current owner has lived there year round, is a vet, senior, or widow. A better way is simply to go to 1 of the tax assessors' offices and inquire about a specific property...they are very pleasant & helpful. Here, it is NOT like in so many states where the houses are reassessed only when and on 100% of the actual selling price. If u see from a Zillow map of prices of sold homes in the zip code you want to by in, that the actual selling prices were similar, then the asking price set by the selling realtor is probably very realistic, even though the published taxes varied considerably with neighbors. When u talk to the tax assessors office, ask them to explain "portability". This is another break that might help u in a future sale.
  • October 10 2013
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First, all sellers try to upsell! That is their job. All sellers assume their place is worth more than it is, and sometimes, when a buyer is desperate or on the other hand, realizes that it is a unique fit that won't come around again, they'll pay the 'upsell' price.

There are three values that exist for homes, and because this isn't a science (or this whole industry would be fired!), these values always have a degree of range.

Assessed Value: The amount the county claims a property is worth in order to levy property taxes. This is generally an unrealistic value. Often times too low, but sometimes high, and almost never correct. Just like the politicians.

Appraised Value: This is the amount a licensed professional claims the subject property is worth. This amount is often touted by sellers to make a buyer think their price is worth the listing price. But appraisals are inherently flawed. Because appraisers are not necessarily familiar with the immediate area and are required to use certain distance formulas, a lower priced neighborhood that is, say, a mere 1/4 mile away, will negatively affect the appraised value even though everybody who wants to live in the pricier neighborhood doesn't care that their are paupers living a mere 1/4 mile from them. There are walls and fountains and a highway separating them. On the flipside, a home in a 'mediocre' priced area may receive an unrealistic bump in their appraised price because they are very close to the walls and fountains.

Real Value (sales price): This is the price the market says your home is worth. If a property has been sitting for months, and it isn't a unique property consisting of a UFO in the attic, and an underground bunker, it should sell relatively (this word is relative) quickly. Otherwise it's overpriced! And truthfully, only agents with A LOT of experience in a particular neighborhood have a realistic idea of what the value of a property (two flat, single family, duplex condo, etc.) is. Contrary to public opinion, it is normally sellers not realtors who overprice properties.

In general real value tends to lie somewhere between the assessed and appraised values. But it ain't complicated...or again, this profession would be eradicated! If a nearby home that is fairly similar sold for $200,000 and the seller wants $250k because the tiles in his kitchen are newer or he is four homes closer to the highway exit or some other absurd justification, the price is bunk. But if the seller has a new kitchen, roof and bathroom and the neighboring home didn't....the price is not an 'upsell'.
  • July 02 2012
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Profile picture for Ofe Polack
It seems to me that we are confusing the assessed value of a property which is set up by the city with the appraised value of a property which is obtained through an appraisal ordered by the buyer's lender.  The lender will not lend more than the appraised value, but oftentimes the appraised value is higher than the assessed value of a property. The listing price could be higher or lower than the assessed value, however  the sales price has to be more in line with the appraised value.
  • June 30 2012
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The sale price can be less but no more than the assess price unless you are paying cash and want to waste money.
No bank is going to lend anyone more than the assess value and an informed buyer and a represented one is not going to offer more than a property is worth.
The sellers can ask for the sky, but they are not going to get it. 
  • June 29 2012
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How a house is assessed varies from state to state - even county to county. In some counties in PA, it's based on the last price the house sold for. In other counties in PA, it's based on a percentage of market value whenever it was assessed. Say the house was built in 1910, it would be a certain percent of the value of the home AT THAT TIME. To complicate matters further, counties do general assessments periodically - then the assessment is based on the value at that time. So you see, there is not much correlation of the assessed value and the list price. It would be better if you discuss this with your Realtor and have him/her show you comparable homes in the area that have recently sold. Then you'll get a truer picture of what the house is worth.

If you are getting a mortgage, the lender will have an appraisal done and if what you offered is more than it's worth, they won't give you the mortgage for that amount and the seller will either have to come down in price or lose the sale.
  • June 29 2012
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Work with a buyers agent, they are there to help you get the best deal
  • June 29 2012
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