Real Estate Tip Of the Week: What Does Tax Assessed Value Mean on a Home?
You might see a price on a home and think – how did they decide on that price?
Well, many pieces need to be researched before finally deciding what the price on a home should be. Not only that, but a home’s price can change depending on other key factors.
If you’re in the arena to purchase a home, you’ve probably heard your real estate agent mention “tax assessed value” versus a “market value” – but what are these, and what are their differences?
First: these values are both at play when a home is listed for sale; a seller works closely with their real estate agent to come up with a price they’re all comfortable in, depending on some key factors that’ll be listed below.
Tax Assessed: This number, unlike the market value number, doesn’t fluctuate like the market value will. An assessor will come and take a look at the property in order to levy property taxes on it. The assessor looks at similar properties and what they’re selling for, any possible improvements done on the home or property, what you may make from if you rent out a room, and the cost of a possible repair if anything happens to your property (break-ins, natural disasters, etc.)
The higher your home’s assessed value = the more you’ll pay in tax. However, this number doesn’t change as often as the market value. Most states prohibit the assessment from being increased by a certain percentage a year.
Market Value: This number can change drastically from month to month and year to year. Ultimately, this number is the price that a seller is willing to accept – the buyer can make a bid at the price, go higher, or negotiate for a deal.
Your real estate agent will help you arrive to this number. These are usually the features that are taken into consideration when deciding on the market value of a home: location, size of home, lot size, heating & energy efficiencies, recent upgrades, home style, and what homes in the same area recently sold for.
So, as a buyer, market value affects your negotiation and what you know the sellers are looking for, whereas, the tax assessed number helps you understand where you’d fall on having to pay for property taxes.
For more real estate tips, stop by Kittitas Title’s Blog.