Do assessed values matter?
Sam Schneiderman, broker owner of Great Boston Home Team (our Monday guy) was an appraiser for nine years. Today, he posts the about tax assessments.
This week one of my clients called and asked how it is possible for an appraisal to come in significantly higher than the assessed value of a property. Something did not seem quite Kosher to him.
The first thing that needs to be understood is that an appraisal is usually based on current value using the most recent comparable sales available, but an assessed value is based on a previous date and uses much older comparable sales.
Residential property values for fiscal year 2010 (July 1, 2009 through June 30, 2010) are based on sales in calendar year 2008. The City of Boston web site at explains that “state law requires cities and towns to assess all property at its full and fair cash value as of January 1 of each year (Massachusetts General Laws, Chapter 59, Section 38).” That means that the assessed values for fiscal year 2010 were based on the assessor’s estimate of the property’s value on January 1, 2009.
The assessed values that we are looking at today should be based on an effective date of January 1, 2010, but until January the fiscal year 2011 tax bills are estimates because the state has to give its final approval to each municipality’s taxable valuations in time for the municipalities to send accurate third quarter bills. That means that the most reliable assessments that we have today are based on a property’s assessed value as of January 1, 2009, which was about 22 months ago.
Therefore, in municipalities that have seen some appreciation over the past year, the assessed value would probably be lower than a current appraisal. On the other hand, in municipalities that are experiencing declining values, the assessed value would probably be higher than a current appraisal.
The second thing to understand is that an appraiser typically walks through the house and confirms its square footage, quality, condition and amenities. In many communities, most of the current assessors have probably not been in most of the houses. Unless the assessing department is aware of improvements that were made to the property, their assessment is based on their best guess about the condition of the property either from an exterior viewing or computer model for the typical house in that municipality. If a homeowner added a bath, finished the attic or basement, or performed extensive upgrades without building permits, the assessor has no way of knowing. That would result in a low assessment for the property.
If assessments are based on accurate information about the property then they should not be too far off of the assessed value in today’s market, but for most properties that’s a big if.
How accurate do you think that your assessment is?
How much consideration do you give to the assessed value when buying or selling?
When was the last time an assessor walked through your house?
