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Satisfied Cu…, Home Buyer in Gulf Shores, AL

What is the difference between "Market" value and "Assessed", and why do listings show the amount of tax on the assessed value,?

Asked by Satisfied Customer, Gulf Shores, AL Sat Jul 28, 2012

which is low?

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In Baldwin County we have the appraised value which is based on recent sales. The assessed value is what you pay taxes on but here if it is a non-rental it is 10% of the appraised and 20% if you rent the property. Assessed means nothing to you as the buyer. If you have serious interest in a property you should contact a realtor to get a current reflection of past sales to get an idea of value.
1 vote Thank Flag Link Sat Jul 28, 2012
Thanks very much--that explains why a $130K house has an assessed value of around $13K. I couldn't figure that one out, and was afraid the $13K was some kind of an annual assessment like some folks have to pay for improvements to their HO or something like that.
Flag Sat Jul 28, 2012
Market value is determined by what has sold around a given property. For example, when doing a Comparative Market Analysis to assist a seller determine a fair list price or a buyer to determine a fair offer price, I look at what has sold within the last six to eight months in close proximity to the subject property, comparing on the basis of the home's style, location, size, number of bedrooms and baths, and amenities (pool, updated kitchen, fireplace) and acreage. Therefore, market value is determined by what has sold in the local market, which can vary from street to street.

As others have already said, assessed value is related to the taxing districts, with the counties usually being the one in charge of establishing this value. They look at the market, but not on an immediate basis. Therefore, because of the lag in updating assessments that can be years apart, some people were overpaying on their taxes in the last few years unless they protested and insisted on an updated assessment to reflect current market conditions. Obviously, the taxing districts aren't in any hurry to lower assessments since this lowers revenues. When the market starts going back up on a steady basis, be ready for assessed values to go up to match. (Funny how that works, isn't it!)

Is there a specific property you are trying to determine value for in order to put on the market or to purchase? If you're working with a Realtor, ask for CMA. If not, I'd be happy to assist you.
0 votes Thank Flag Link Sat Jul 28, 2012
The "Assessed" value is determined by an appraiser from the county's property tax division. Properties are typically only re-assessed every few years.

"Market" value would be determined by the buyer's appraiser that is ordered by the lender. The apprasier will used like homes which have closed in the last 90 to 365 days. That is the value the lender will use for the mortgage calculations.

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0 votes Thank Flag Link Sat Jul 28, 2012
Counties here, like the State, have no say about Market Value. It fluctuates up and down independently of any legal entities, and operates strictly upon the law of supply and demand. Assessed value moves up (or, conceiveably, down, much more slowly and is set by the taxing district (Towns here) as a way to try to make taxes more fair, the idea being that those with the nicer properties should pay more in taxes, and vice versa. It works better sometimes than others. The Assessed Value changes, at the most, yearly. But far more often only once every few years. It's response to changing markets lags greatly and, really it's purpose is not to accurate reflect Market Value but to provide a measure of fairness ion property taxes. This lag explains why (adjusted) Assessed Values are often far less than Market Value and why, once in a while, they are higher.
0 votes Thank Flag Link Sat Jul 28, 2012
Market value is what the county says the home is worth based on sales in the area.
Assessed value is what the county says you will pay taxes on.
0 votes Thank Flag Link Sat Jul 28, 2012
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