In an oscillating real estate market, knowing how much a property is worth is nothing short of a strategic masterpiece. Many factors—such as real estate assessment, market value analysis, area comparables and a seller’s motivation—go into finally deciding that a one-story ranch in Charlottesville’s Rose Hill neighborhood could be listed for around $290,000.
On most listings, however, the real estate assessment seems to grab buyers’ attention more than other factors. In the end, that number is the value the local government gives to one property and is required to be 100 percent of fair market value.
For Realtors, on the other hand, this number could be a distraction.
“I think that they can be useful, but [only] in context with looking at the wider market and also understanding that they are consistently inconsistent with respect to market value,” says Jim Duncan, Realtor with Nest Real Estate Group and author of the RealCentralVA blog. “It seems that with some properties, where there is very little differentiation, cookie-cutter [communities], they are much more accurate than with properties that will have more character.”
According to the Real Estate Assessments FAQ on the city’s website, most inspections done by the assessor’s office are exterior inspections, because the assessor “does not get into every home when assessments are made.”
In Duncan’s experience, this means that some assessments are way off. “There are some [properties] in the city that I have seen that are easily $80,000 to $100,000 mis-assessed,” he says. He adds that other assessments can be more accurate—within $5,000 of the property’s true market value.
For 2011, assessments for existing residential properties in the City of Charlottesville declined in value by .14 percent and Albemarle County reported a decline of 1.72 percent.
So, how does a Realtor use this information? It depends. “I think half the time I will include the assessment as part of my analysis if for no other reason than to discredit it,” says Duncan. He calls 2011 real estate assessments “backward looking values,” highlighting the previous year’s statistics, while Realtors are always looking forward.
To find the real value of a property, one has to be able to dig through its history, including prior assessments. A little work up front goes a long way.
And although assessments can be inconsistent and unhelpful, there are instances when assessed value has more weight than other elements. For example, “In certain areas we really don’t have the volume to determine what market value is,” says Duncan. “You need six, 10, 12 comparable sales to help determine what the value is and when you have a vacuum of only two or three sales, it might place more value on the assessment value.”
Sometimes big changes in average assessments can be attention-grabbing. Case in point: the Rose Hill neighborhood. This area reported a 16 percent decline in assessment value compared to the previous year.
“You’ve got older homes, dilapidated conditions in some of those, and the sales that we have seen, the prices are reflective of that condition,” said City Assessor Roosevelt Barbour, Jr. in a January interview.
For Duncan, however, assessment numbers for Rose Hill are “irrelevant.”
“The assessor’s goals are to generate tax revenue for the localities, and often that’s at odds with the market and with the taxpayers,” he says.