Home Buying in Elm Park>Question Details

Jim Jones, Home Buyer in Brooklyn, NY

Property Tax

Asked by Jim Jones, Brooklyn, NY Thu Dec 30, 2010

What does the Property Section mean when you see, market vs. assessed. The amounts are always far apart. Does it mean the difference between what the market value for that house would be in a perfect market compared to the REAL and ACTUAL value really is?

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Hello Jim, Here in NYC every year the Department of Finance notifies you of your property's value and describes how they arrive at that value. The market value is estimated for 1-3 family homes based on recent comparable sales; the Effective Market Value is the value on which your taxes are based, calculated by taking the assessed value and dividing it by 6% (.06) The Assessed Value is determined by multiplying your property's market value by an assessment ratio of 6% for 1-3 family homes to determine the assessed value. However, your assessed value may be lower than 6% of your market value because by law your assessed value cannot increase more than 6% per year and 20% over 5 years for 1-3 family homes. The Taxable Value is equal to the assessed value less any exemptions.
Web Reference: http://www.clovelake.com
1 vote Thank Flag Link Wed Feb 23, 2011
Hi Jim,

Anna and Patrick are both correct. The assesed value is determined by the department of finance and this is what the property taxes are based on. The market price is based on similar property sales in the surrounding area within the last 6 months. You will almost, always see a difference in the two.

Hope this helps. Best of luck to you and have a happy new year.

Rocco Guercio
Equity Source Home Loans
347-462-4210
1 vote Thank Flag Link Fri Dec 31, 2010
Keep in mind that assessed value has no bearing on market value; assessed value determines taxable values--market value is determined by comps--recently sold similar properties in the immediate area--for additional information regarding assessed value see link--
http://www.orps.state.ny.us/pamphlet/taxworks.htm
1 vote Thank Flag Link Thu Dec 30, 2010
Assessed Values are valuations used by your town to calculate real estate tax revenue. It often is correlated to market activity from market sales data that transpired in the two previous years of the town. Market value is the value a ready, willing, and able buyer will pay on the open market for the home. In my 20 years of selling real estate I have more times than not seen these two numbers be very wide spread and have limited correlation to one another. I am seeing now however that in our local market assessed values are very close to sales numbers. Brokers are watching the assessed values as a real guide to what the open market will value a home at. I am sure it will change in the future again!
0 votes Thank Flag Link Wed Feb 23, 2011
Jim:

Here is the informed answer to your question. Unfortunately the earlier replied missed the mark. When real estate agents and market participants talk about market value they mean market value right now. The market value right now is influenced by comparable sales of similar homes and competing properties listed for sale.

Appraisers and assessors estimate market value for property owners, lenders, and property assessment purposes as of a specific date in time (know as the effective date of the appraisal or assessment). If the effective date of the last assessment was January 1, 2010, that considered comparable sales in 2009, of course the market value on December 30, 2010, is going to be very different. Most assessments DO REFLECT MARKET VALUE (and they are NOT determined by the finance department). Assessors are just using a different effective date and using mass-appraisal techniques (studying large amounts of data to value all properties in their community).

To find out more about market value now talk to a real estate agent. To understand assessments call your local assessor.
0 votes Thank Flag Link Fri Jan 28, 2011
Assessed value is what the county assessor uses for tax purposes. They base it off of current sales for homes of similar size and location. The assessed value is neither the current market value nor the true value.

Market value is what a house could be listed for if selling in the current market. It's based off of current sales as well as currently listed homes. For example if you had a 3 bedroom 2 bath home, then you compare it to other 3 bed 2 baths in the same location and condition and if they are selling for $300,000 then the current market value would be about the same. There is a little more to it then that, but that's the jist of it.
0 votes Thank Flag Link Thu Dec 30, 2010
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