Assessed Value vs. Fair Market Value
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 for, 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 that knows better is going to be thinking 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,…