The new year is here, and with it comes the arrival of certain yearly items for which we each give a shout of joy. Usually, real estate assessments aren’t of this particular group. But for those of us wishing, hoping, trying (and, depending on your faith and/or desperation, praying) to sell our houses in this unpredictable market, annual assessments might just offer some guidance in finding the perfect price to move your home.
Well, if Realtor Charles McDonald’s two tales of assessments offer any indication, not really.
McDonald, a Realtor for Remax Assured Properties, tells the story of recently receiving an e-mail flyer for a property. This particular house was listed over $100,000 below the assessed value.
“On a personal note,” says McDonald, “if somebody were to offer me the assessed value for my personal residence today, I’d have a contract in their hand in 15 minutes. It is so far out of whack right now. [Assessments] are riding way too high.”
But with the market aggressively softening in the last six to nine months, expect this year’s assessments (which, for Charlottesville and Albemarle, come out at the beginning of February) to reflect the market’s downturn. And with the market as shifty as it is, just how much should you and your agent rely on the newest assessments when tackling the most important step in selling your home—pricing it correctly?
First, it’s important to know the difference between an assessment and an appraisal. An assessment is the price the city or county uses to figure your real estate taxes. They are done yearly by assessors working for each locality. An appraisal is a different monster. Independent contractors do appraisals at the request of real estate agents, usually just before a sale is closed.
City and county assessors both try to determine the fair market value of a property—the land and any structural improvements. They use many of the same market-analysis data that agents use, such as recent sales of comparable houses. An appraiser, though, is able to do a more thorough job. He or she has full access to the property and house and detailed knowledge of any improvements. Assessors don’t.
County Assessor Bruce Woodzell says that each assessor is assigned a certain number of properties, and goes out to each during the day. But many times they don’t have the opportunity to go inside each house and have to make an educated guess at what they are pricing.
“It’s the first thing they teach you when you sit in the classroom,” says Woodzell. “Day one: It is not an exact science; it’s an opinion of value based on some good techniques.”
So does it make sense to use your new assessment in setting a listing price?
“It used to play more of a role, but I look at it now and it does not seem to make sense,” says McDonald. “Honestly, I can’t use [assessments] right now.”
What McDonald suggests, though, is to jump ahead in the process a bit and have your house appraised before setting a price.
“Normally I would just do a CMA (Comparative Market Analysis) on a new listing. Recently I have been advising my clients to also get a professional appraisal from a (licensed) appraisal company. This gives the homeowner a true picture of their home’s current market value when determining list price.”
So while your home’s assessed value is a best guess, you may want to get a second opinion before listing it, especially as yearly assessments struggle to keep up with this rapidly changing market.