The assessed value is but a tool when buying a home. In the past few years, Basking Ridge seemed to have ended the year at almost 100%. In 2010 for example, it started the year ahead, and by year end was right on target. Interestingly, however, even in those years, some homes sold above, while others were considerably below. The town looks at neighborhoods for the prior October to October when estimating assessed value, and factors in where they believe the economy is going.
In Basking Ridge, this year started and until around March, had very little inventory. Only 107 listings including condos. We are now up to 198. Last year at this time we had almost 240. The low inventory created a real demand. I sold a home in the 1.2 range that was assessed in the 900s. I also sold one in the low 500s that was assessed about 30K more. The assessed value really is just a tool. For example, on my street, my assessed value has gone up and down in the past few years and I've done nothing to my home. What happened? A hard to sell home because of the yard being extrememely small due to conservation easement turned over at a much lower price. Using the neighborhood October to October method, we went down. This year, three homes sold, at several hundred thousand more, because they had no "issues." One even had a pool. My assessement went up. Lafayette Watch is experiencing a similar trend. A magnificently updated home sold for 1.325. Two identical models on the golf course nicely done but not like the first one sold in the 1.175 range. The assessments there will most likely go up next year as a result.
The best barometer of the value of a home you are buying are its immediate neighbors, and similar homes in the town: number of bedrooms, LOCATION, and amenities. You really want to have been or have a realtor who has been in the recent sales used as comps so that you know first hand what happened, and also if a home is just one that someone had to have and won't be repeated, or one was in distress and sold low to sell quickly.
This year's trends are still location location location, and also amenities, updates, especially kitchens, and home style as well. a four bedroom center hall colonial will command a higher price than a four bedroom bi-level all things being equal. I've even seen realtors fall prey to assessed values and underprice homes using this older tool, as well as wind up going below assessed value because they didn't consider that the home had the proverbial cell tower in the yard.
So my advice would be to use the assessed value as a tool only, and compare only by area. Don't forget not only the house but it's location and amenities count. Look at recent sales and their assessed value, and compare a little wider net within the town but similar location types. If you don't have a realtor, I'd be happy to help. If you do, I'm sure your realtor is not only sending you active listings, but under contract and recent solds on a regular basis. That's the best market education you can have, as well as understanding that right now, while we are still having bidding wars on homes on the market a day or two, January and February were extremely hot!. Pockets such as the Hills also tend to have higher prices than some more established areas.
Best of luck. If you want to see market trends and sales for the past month in town, please visit my site, http://www.marieyoung.net and click on market watch, and if you want to see a rolling 12 month's worth of sales by neighborhood or subdivison, please also visit my site http://www.marieyoung.net and click on neighborhoods. There's not registration required, and an excellent source of critical and meaningful data.
And remember the old economy 101 anecdote: having one foot in 40 degree water and the other in 100 degree water yields an average temp of 70 degrees, but rather than comfort, one foot's freezing while the other is burning. The average really doesn't mean much. I've sold over 15 homes already this year, and each had its own unique story.
- Assessed values are as of October 1 of the year past. List prices can fluctuate over the year, and if demand becomes very high or drops off in a certain neighborhood, list prices may go up or down accordingly. Also, a homeowner may have made updates after Oct 1, so the assessment does not always take into account all upgrades.
- Often the Township assessor is not able to get access to a home forcing the assessor to estimate. For example, for one of my buyers, I checked the Township's property tax record card to confirm the square footage for a home for sale in the Hills. The assessor had not been able to tour the home, so they estimated the basement was fully finished and based the home's tax assessment on that; however, only a small portion of the basement was actually finished.
- List prices and sale prices are also usually different. A tax assessment does not mean that an interested buyer will be willing to pay the seller's list price. In some cases, homes will have to have price reductions before it comes into line with market values. In other cases, there may be bidding wars where the sale price ends up higher than the list price.
I recommend looking at tax assessments only as a broad guide, because you cannot assume the assessment is the true current value of any home. Reviewing recent sale prices of comparable homes is the best way to evaluate whether a home's list price is reasonable, overpriced or underpriced.
If you are considering making an offer, or would like to know values of a specific area or neighborhood, ask a local real estate agent to send you the selling information for comparable homes that have sold in the past six months in the same area or neighborhoo of a home you like.
When I work with buyers, I often send them the listings from recently sold homes so they know actual current market values of comparable homes, by looking at location, pictures and sale prices. Ask your agent for this information, or feel free to contact me if you are not working with an agent yet.
In an appreciating market, the comps are now often higher and if their is low inventory and high demand as is the case most often in Basking Ridge, homes that are in good shape often sell over the assessed value and in many cases have multiple offers and sell over asking price. What you need is a realtor that know the local market and is very familiar with the comps and area to assist you in offering the right price on a home. Please call me at 908-581-4694 for further discussion and assistance. Jane Devine
Therefore, because the assessed value is for a general range for neighborhood, style, size, etc. they will not or need not match the listing price of a home. Remember, the listing price is just that the listing price. It is not always what the home will eventually sell for.
It makes the most sense, from a taxing standpoint, to be slightly below market value. The reason for this is to avoid tons of tax valuation protests to seek to reduce the tax appraisal value and thus, the tax requirement. The closer the assessed value is to market value, the easier it is for taxpayers to inundate the local assessment boards with protests, using comparable data.
My golden rule is when I'm holding a property, I want low tax assessed values and when I'm selling, I want high assessed values. :-)
Darrell D. Drouillard
Home Team of America
16719 Huebner Rd., Bldg 4
San Antonio, Texas 78248
'Serving all Your Real Estate Needs'
The County determines the assessed value based on their need for revenue and the max amount that they can bleed from their residents.
The Market Value is determined by the recently sold comps; taking into consideration the upgrades, condition, location, etc. Just like an Assessment does.
The two numbers are not tied together, and I doubt that the Assessor even looks at recent comps.
Your Realtor can do a CMA to determine your offering price.
Don't worry about the assessed value.
If you have lower assessments, it probably means that your County is efficient and well run, which is a good thing.
Good luck and may God bless