Is it good for the seller if the listing price is very close to the tax assessment?

Asked by Jennifer, Massachusetts Wed Nov 5, 2008

The house is assessed by the town at $296,000 and is listed at $300,000. What does it mean if a house goes below assessment?

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Sanjay Gupta, , Lewiston, ME
Wed Nov 12, 2008
In the market value of a house, a number of factors contribute - the prime ones being how much will a seller sell it for and how much will a buyer buy it for. For the first, the seller always thinks of how much he or she paid for it and how much mortgage is left on the house. Then other considerations - how desperately money is needed, how soon do they have to move and how long can they hang on to a home they do not need now. Also, whether it is an investment property or a self occupied home. For the buyer also the same factors apply for the most part, but the presence of similar properties in similar areas and their listing price is also important.

As far as the assessed value is concerned, it is set by the city or county government to collect the maximum tax they can. After all they have to finance their senseless spending. So I believe, that at least for the year that the property was assessed in, it should be the maximum money that you should pay for the property.
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Ken Snyder, Agent, Boston, MA
Fri Nov 7, 2008
The listing price of a property needs to be based on comparable sales in your area but even more importantly, reflect the competitive situation in your market (one tells you what's happened in the recent past, the other tells you what's happening now.) If you have a highly desirable property with little competition, you may be able to price one way. But if your property is less desirable then the competition, or there are lots of similar properties on the market, you have to price (and stage!) your home to be the one that buyers feel compelled to buy over your competition. You also have to be prepared to react to the market quickly. What I find in Boston is homes that are prepared, priced, and marketed correctly can still sell very quickly. Those that don't tend to hang on the market for months.

I would also agree with Michael Grimes - you need to be aware of how your price compares to assessed value vis-a-vis other properties on the market and react accordingly. If most properties are priced over assessment and yours is under, you can use that as a marketing plus. If it's the other way around, you need to be able to explain why that is.

Hope this helps!

Hope this helps
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Heather Coll…, , Concord, MA
Thu Nov 6, 2008
What we are seeing now in my area is that most of the properties are selling just under assessment. I think depending on the house and if there were renoations or upgrades done that dont reflect in the assessment, that the $300K asking price isnt off base. (keeping in mind, that the offer and selling price will most likely be closer to the assessment).
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Territory.c…, Agent, MA,
Thu Nov 6, 2008
Assessments vary so home buyers and sellers should never hang their hats on that number. A lot of lsting agents will use the listing price being close or below the assessed value as a marketing ploy however good buyer agents and educated buyers know not to take the bait.

The one instance assessments might cause issue is if the buyer agrees to pay significantly more than the assessed value. In this volatile banking market the bank might feel uneasy about lending when the buyer is "over paying," and as a result not deliver a commitment.
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Derek Tye, Agent, Cincinnati, OH
Thu Nov 6, 2008
Every tax assessment is different. Some counties are very accurate while others are very far off. I would consult an appraiser or a few realtors in the area to get a better gauge.
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Wendy Fox, Agent, Weston, MA
Thu Nov 6, 2008

Although the other agents have good points, I disagree. I think it is good for the seller if the listing price is close to assessment because it presents value to a buyer- it helps the price of the home seem "not inflated" if they feel they are buying the true value of a home. Assessment is the value of the land plus the value of the structure - by the town.

A year ago, in a different market, assessments were a very different number than market value, however in this market, buyers are looking for a price closer to or even under assesment. For this reason, I think assesment is now playing more of a part in the market.

If the house sells below assessmant, you can ask the town to re-assess the taxes, but there is no guarantee.

I hope this helps. Good luck.

Wendy Fox
Coldwell Banker
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Michael Giles, Agent, Beverly, MA
Wed Nov 5, 2008
Hi Jennifer,
The easy answer is that assessed value has nothing to do with the value of the house. The truth is that we are in a buyer's market and it is one of the first things that an uneducated buyer looks for when searching online for homes. With today's technology, many buyers are waiting until they have located a home before hiring an agent to represent them. It is for this reason that you should have some idea of what the sale to assessed value ratio is on comparable homes in your community. If your home has a much higher ratio, then you need to address the differences in your marketing. Pricing homes is very difficult in this market. Once you arrive at a price you need to listen to the market. If you get constant showings but no offers then you need to react. If you get no showings and you feel that the property is being properly marketed, then you need to over react! Best of Luck.
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Jeff Poleet, , Little Rock, AR
Wed Nov 5, 2008
I agree with Pam. Tax assessment has no effect on the market value of a property.

One Example. I have one property listed right now that was assessed by the county for $663,000 not more than 20 days ago. The property is currently listed at $329,000 and has been so for 79 days. It is simply not worth anywhere near $600,000 dollars.

There are two different goals and objectives for each activity. One value is determined for the purpose of selling a property on what people will actually pay? The other value is set to collect tax revenue.
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Scott Godzyk, Agent, Manchester, NH
Wed Nov 5, 2008
It all depends if the assessed value is current. If it was done this year then your house would be worth near the assessed value. if it was assesses in 2007 it would be woth approximatley 12% oess and if in 2006 or earlier a good 20% less. My estimates will differ in most areas but it is a good approximation. So for the seller if they get close to assessed value they are doing well as actual price of what it is worth in todays market does not always relate to assessed value. i hope this helps you Jennifer
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Scott A. Nel…, , 02155
Wed Nov 5, 2008
Not much, listing at the assessed values when properties are selling for less means that the home is over priced. Assessed values are set by a formula by the municipality every 1-3 years. If the assesment is a few years old it might not take into account the more active and volitile month to month market activity.

A better gauge is the past 3-6 months of market activity for like properties in close proximity.
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Pam Simpson, , Senatobia, MS
Wed Nov 5, 2008
The listing price of a house should be based on recent sold comps (comparables) and does not have very much at all to do with the tax assessment, at least in my area. I suppose in certain areas where prices have fallen, the eventual sales price could fall below the assessment.
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