Property Q&A in Group 14621>Question Details

Shay, Home Buyer in Rochester, NY

I was checking the price on a house, and I saw, that the house was assessed, much lower than the asking price.

Asked by Shay, Rochester, NY Sat Apr 18, 2009

Can the seller, sell the house higher than assessed?

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Answers

3
Absolutely. The assessed value is just the towns assessors estimate of value based on a drive by.
1 vote Thank Flag Link Mon May 13, 2013
Shay, The home also could have been a HUD home and been remodeled and would have a lower assessment. You should do a competitive market analysis of a property before making any offers.
Thanks, Ray
0 votes Thank Flag Link Sat Apr 18, 2009
Hi Shay,

The following is an explanation to assessments and the facctors and techniques used to reach assessed value. I found this on the Find law website.

Assessing Real Property

There are three principal methods for assessing the value of real property. These differ based on the kind of property being assessed.

The cost (or replacement) method. This method is used for assessing buildings or other structures. Assessors estimate how much it would cost, using current rates for material and labor, to replace a given structure. An assessor will deduct the reasonable depreciation of the property but add the value of the land. This approach is most appropriate when the assessment is of a new and unique or specialized property. It is also useful when there are no meaningful sales of comparable properties.
The income method. Under this method, assessors estimate the amount of income from a piece of property if the property is used to produce an income. This method is used for apartments, stores, warehouses, shopping centers, and office buildings. To arrive at an assessment, the assessor considers the business taxes, the amount of income the property may generate, insurance costs, rates of vacancy, operating expenses, maintenance costs, and the current interest rate charged for borrowing money for making improvements or repairs on such a property.

The market or sales comparison method. Here, sales of similar properties are compared to each other and adjusted for differences. Most residential real estate is appraised by using the market or sales comparison method. This approach is similar to the method banks employ to value property when they consider issuing a mortgage.

Most states appraise various classes or types of real estate using other approaches to value. For example, farmland or timberland may be appraised on its use or level of productivity. Business inventories may be assessed on the basis of the business's records, as well as the state of its machinery and equipment. And assessors may even combine approaches to arrive at a fair appraisal of a piece of property.

However, tax assessors do not go inside of the home. Perhaps the kitchen has been updated, a bathroom added. A finished basement, brand new roof, new windows, air conditioning added. These would increase the value of the home as well and may not be included in the assessors calculations. Thus a higher asking price. Keep in mind that if you purchase the home at the higher than assessed value price, you will be paying taxes for the price that you paid. This is not in all cases, but the majority of cases. Also if the asking price is out of line it will not appraise, if you are using a bank to finance the home. The bank will loan you money up to the appraised value and not any more, unless you are applying for a rehab laon as well.

If I can help you further please feel free to contact me. 585-520-1733

My Best,

Kelly Herman
AB Cole Real Estate
Geneseo, NY
0 votes Thank Flag Link Sat Apr 18, 2009
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