Home Buying in Salem>Question Details

Albert, Home Buyer in Boston, MA

We are looking at a house that's listed at 400,000, yet assessed at 360,000--isn't this trouble?

Asked by Albert, Boston, MA Sat Feb 16, 2008

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9
No trouble at all. Tax assessments bear little or no relationship to the value of the property. Tax assessments are often vastly "off" from the real value of the property, even when the jurisdiction claims to be assessing at 100% of value. What you want to do is determine the real value of the house. That's done by looking at the "comps"--the comparables. You want to look at what's sold that's comparable to the subject property, generally within the past 180 days...and preferably a shorter time period than that. You should also look at properties that were listed but not sold--either the listings expired, or were withdrawn. That generally suggests those properties were overpriced, and therefore can provide a "ceiling" on values in the area.

A Realtor can do all that, and will be willing to do so for you. One other word of caution: Do not rely on online, automated sites like Zillow. Sometimes the numbers are fairly good; sometimes they're horrible. I personally prefer http://www.RealEstateABC.com because it allow a user to more finely tune the comps. But even that's nowhere near as good as having a competent Realtor run the numbers for you.

But, just to reiterate, pay no attention at all--none, nada, zilch--to a tax assessment when trying to determine the value of a property.

Hope that helps.
3 votes Thank Flag Link Sat Feb 16, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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Please contact the tax assesors office and have a discussion about the property..As a buyer I have always kept a close eye on assessed values...it is important to understand the timetable of assesment (does it take 3 years to reassess values in your town/county/city or 5 years? how are sold homes factored into the assesment cycle??? Remember that you should also have an exit strategy for the property you are buying.
Due diligence is important..keep asking questions -- tax assesors offices in many areas of the country have strived to keep up with market values and this includes using new technologies/programs,shorter periods of assesment and improved tracking of sales.they are not insignificant
best of luck
Mary
2 votes Thank Flag Link Mon Feb 18, 2008
Don is right on the money. In practice, assessment has nothing to do with market value.
Web Reference: http://www.provestre.com
2 votes Thank Flag Link Sun Feb 17, 2008
Hi Albert,

The assesed value has nothing to do with current market conditions but is only what the city values the property at for tax purposes. I could do a quick Market analysis for you if you'd like me to. Just give me the address and I'll give you my oppinion. Remember the higher the assesment the higher the taxes.
Web Reference: http://www.hompurchase.org
1 vote Thank Flag Link Mon Feb 18, 2008
Like everyone below said, assessed value is not market value. People always get worried when they see a lower assessed value than "market value".... But remember what this really means... If the assessed value is lower than the market value, the owner of said property is actually paying less in taxes than they should be... If you think THAT'S a bad thing, then you should probably be looking for property in Sweden.
1 vote Thank Flag Link Mon Feb 18, 2008
Hi Albert,

Don summed it up. FYI, In Salem, 5 homes between $350,000 and $450,000 show as SOLD in the MLS. All assessements reported are 2007. Here's a list: Sold $389 - assessed $404, Sold $375 - assessed $410, Sold $355 - assessed $288, Sold $354 - assessed $352, Sold $400, assessed $388.

If you want to research specific properties in Salem, try the assessors database which you can find through the city web site or at the address below. Some assessor's sites let you search for comparable sales. This one doesn't seem to allow such a search.

Chris
1 vote Thank Flag Link Sun Feb 17, 2008
It's not a problem, but it is something to explore. If your talking about Salem MA, as a local agent I can tell you that our Tax Assessments frequently have no relationship to the Listing or Sold prices in town due to the records inaccuracies. Further, most available Salem tax records are based on 2008 in that assessments have not been been updated in MLS or the public records. The field card at the Tax Assesors Office would be accurate for the current year's assessment (which reflects the market from 2009).

That being said, I will also tell you that the average Listing price in Salem is $350,000 while the average Sold price is $315,000. But, prices have increased 5-7% in the past year. Remember a house must appraise out in order to obtain a mortgage on that property and today's appraisals are very strictly regulated.

Finally, has the property had recent updates, is it waterfront or waterview, is it in one of Salem's Historic Districts? These are all questions that you must know the answers to in order to value the property. Due diligence on your own or with the assistance of an experienced realtor is the best answer.
0 votes Thank Flag Link Wed Mar 9, 2011
Assessments have nothing to do with market value. The best thing to do is look at recent sales in the area to determine value or have an apprasial done on the property.
Web Reference: http://suekeenan.com
0 votes Thank Flag Link Wed Jul 23, 2008
Sorry Albert, my message should have read 5 homes have sold in Salem IN THE LAST 3 MONTHS between $350,000 and $450,000. Hopefully that makes more sense!
0 votes Thank Flag Link Mon Feb 18, 2008
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