Based on the current housing market, what role does the assessment price play in selling price?

Asked by Karen Maunder, 01824 Wed Aug 6, 2008

I guess what I want to know is would it be reasonable for my offer to be the assessment price, and then barter from there?

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Annette Law…, Agent, Palm Harbor, FL
Sun Jul 6, 2014
Karen, as others have stated, using such numbers found in the tax assessors data base takes you down the slippery slope of irrelevance. I do keep track of these numbers and find market value can range from 0.6 to 1.6 of assessed value. I will suggest there are community attributes that will suggest which communities will have assessed values closest to market value.

Without an intimate knowledge of the communities that will allow you to calibrate properly, you are going to be just as accurate taking the random numbers generated by Zillow and Trulia.

Now, be advised, there are many enterprises (Bank of America) who will actually use Zillow as a basis for evaluation of the value of a house. If you want to be considered as competent as Bank of America, then the tax assessed value, Zestimates. Evaluations and the gray beard at the end of the street are all legitimate sources.

If, however, you are on the verge of making a real estate decision, you would be well advised to rely on the knowledge and experience of those who help in the sale and purchase of dozens of homes every year. They are just a phone call away.

Best of Success,
Annette Lawrence, Broker/Associate
Palm Harbor, FL

Take a look at the "Market In A Minute" (MIAM) reports I've posted on Trulia. The data revealed are the indicators regarding whether the tax assessed value has any relevant relationship to market value. But, with a MIAM report, you have all the data you need anyway.
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Craig Chemaly, Agent, Carlisle, MA
Sun Jul 6, 2014
In my humble opinion, the assessed value of a home means absolutely nothing in this housing market (or any market, really). There are dozens of reasons an assessment can be WAY off. The most important factor in determining the value of a home is the selling price of similar homes in the immediate area.
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Ron Morrison, Agent, Ayer, MA
Mon Oct 19, 2009
I have been using "assessment ratios" for years. Each town must be calculated as an individual situation. The ratio approach is very good for predicting the top and bottom of the price market. Many professionals are against using this approach because it is "too" easy. The truth is, you cn predict a range comparable to the normal CMA approach 90% of the time. Assessments are done every year using the same approach with consisitent adjustments. In other words it is as objective as possible in a subjective business. I encourage my agents to use this method, and my Company issues the "ratio" numbers monthly to the public and all agents. Themethod works well in tandem and as a cross check to the traditional pricing methods. It serves as a very good guide for buyers and sellers to stay within and follow the trends of the market.. If you live in Massachusetts, I'll be happy to send you a"ratio number" for your town. Email me your name,home address,email address, and style of home.
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The Moores', , Templeton, MA
Tue Aug 12, 2008
To keep it simple! Each town has expenses and therefore sets a tax rate . This rate is based on # of residence taxable and the overall budget $$$ the town needs. Each owner pays a fee based on a fomula for square footage, # of bedrooms , acreage, etc.... But again simply. The town sets the assessment price based on theire own budgeting needs.

Hope that helps,
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Galileo, Home Buyer,
Sun Aug 10, 2008
I recently looked at all the assessment prices and all the sales prices for a range of homes sold in one particular MA town, and I found the following:

1. About half of the time, assessment was higher than purchase price, about half the time lower.
2. Nearly half of the time, the difference was drastic (greater than 10 percent).
3. The most extreme differences were in cases where the purchase price was much lower than the assessment value.

Based on my very limited data set, it seems that assessment value is slightly less effective than, say, the Zillow estimates as a predictor of sale value (though it is a good predictor of what you will pay in taxes).

You can do a similar check for your town (using online tools like trulia, redfin, zillow, eppraisal, etc.)

And take it all with a grain of salt. For many purposes (say, determining which neighborhoods are pricier than others), crude ballpark figures are enough --- but when you're deciding how much to offer for a home, you probably shouldn't be happy with an estimate that leads you to overpay by 20% a good fraction of the time.

If your question is about negotiation psychology (e.g., you want to give a lowball offer legitimacy by pointing out to the seller that you are, after all, offering the assessment price), then you should also add that you believe that a more careful CMA supports the assessment value (if this is indeed the case). But in the end, your ability to get the home at a lower price will depend on the seller's motivations and on how much interest other people are showing in the house at the current listing price. (Are there already three offers near or above the listing price? Or are there no offers --- with the house sitting around for months, sometimes going entire weeks without a single showing?) This is information that the seller has and you don't (though the listing agent may be willing to give you hints, if it is in the seller's best interest to do so) --- and it has little to do with assessment value.
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Jonathan Bow…, Agent, Stoughton, MA
Wed Aug 6, 2008
The assessment of a property has absolutely minimal to no bearing on the actual value of the property.
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Michael Giles, Agent, Beverly, MA
Wed Aug 6, 2008
Similar forms of this question have shown up on a consistent basis and it is always asked by a buyer. Why? Because the truth is that buyers set the market. What they are willing to pay for property is what the market is. Regardless of whether it is a good market or a bad market, most buyers base their value on a sale/assessment ratio. This can result in missing out on the property that you want or over paying for a property that you fall in love with.
To determine the best asking or offer price, you need to rate the specific property with SIMILAR properties.
You can't compare the sale/assessed value of a 4 bedroom, new construction colonial with that of a 2 bedroom, 20 year old ranch. Have a market analysis done and make sure who ever is doing it is comparing apples to apples.
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Michael Lefe…, Agent, Westborough, MA
Wed Aug 6, 2008
Almost none Karen.
I am a certified residential appraiser as well as a real estate agent. Assessments are based on historic data, and with the volatility almost ALL markets in MA have experienced lately, it is nearly impossible to base market value on assessed values. As RealtyMan states the very best you can hope for is to determine a ballpark ratio of assessments to selling prices. Your best bet is to have your agent do a thorough market analysis, or get an official appraisal done, in order to help you determine a reasonable offer.

Good luck!
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John Savigna…, Agent, Hopkinton, MA
Wed Aug 6, 2008
Good question. It depends on the town or city and what you need to do is look at recent sales in that town and see what the trend is in that community, in other words are hoomes selling at assessment or below. and what avg. range compared to assesment. Be careful in that the assesment is broken down into 2 parts, the land value and building value. if you have a home on .25 acres and a similar hom on 3 acres the assesment will be greater based on the land.
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Gerry Bourge…, Agent, Leominster, MA
Wed Aug 6, 2008
It all dpends on what town you are looking at. Also, be aware that some towns data is not accurate or consistent (I won't go into details).

The only way to know for sure is to compare the sale prices of recent sales to the current assessment. If you are lucky, you'll determine a ratio. It's a guide but by no means should it replace a thorough market analysis on the specific property.
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