Assessed Value vs Fair Market Value
What’s the difference? If you go to your local tax assessor you see the value of a home. But is this what you should sell your home for? No. And here is why . . .
The assessed value is what a drive by assessor, or tax appraiser, or tax assessor, is valuing your home to determine your property taxes. This is why people protest this number. Obviously in the eyes of a tax assessor, I want my house to look like a pile of rubble so I can pay the tax on a pile of rubble. When I go to sell my house, I want it to be worth as much as possible. The two numbers are not the same. A tax assessor did not go through my house, check out my updates and compare the ins and outs of other like kind properties to see it’s real value. And you don’t want them to! What my house is being taxed is NOT a good way to determine the value of a home.
Fair Market Value – this is the price in which a buyer pays on the open market when both buyer and seller are not in any kind of duress (ie Foreclosure, etc). Realtors research homes in the area that have similar characteristics to help determine what a buyer may pay. Once the home is priced on the MLS, buyers come and make that decision. No offers = probably overpriced and buyers don’t see the value. Lots of offers, does NOT mean it’s underpriced though. In a seller’s market, people are willing to pay more for the right home and location. Then, the seller gets their pick of the best offer for their needs.
In a competitive market like right now, summer of 2021, it is a fierce seller’s market, sometimes there is one house for 10/20/30 buyers (depending on the area). Due to the laws of supply and demand, houses are going above what they may actually be worth to an appraiser (a lender’s appraiser to help determine what they can lend for the property who look a similar SOLD properties in the area) and many people need to be willing to pay the difference between an appraised value and the market value. The market moves faster than the appraised value in many cases.
In Texas, we live in a non-disclosure state. This means that you do NOT need to disclose what you paid for a home in any public format, including the taxing authority. So next time you look up a property through your local taxing authority, do NOT assume that is the value of the home. It is likely not. And while I am finishing this thought, Zillow and Zestimates are likely off too. Sorry Zillow (but not really).