What is the difference between Market Value & Tax Assessed Value?
Today we will discuss the difference between market value and tax assessed value. Setting the two apart is very important when coming up with your asking price.
How does the city come up with Tax Assessed Value
State law requires city real estate assessment valuations to be 100 percent of estimated fair market value. ‘Fair market value’ refers to the price a property would bring when it is offered for sale by one who desires-but is not obliged-to sell it, and is bought by one who desires-but is under no necessity of having it. Fair market value is reflected in arms-length, open market transactions, which are referred to as ‘valid sales’.
Why Wont My House Sell for Tax Assessment
Many homeowners in Hampton Roads have property for sale with an asking price at or above city assessment. Most of these homeowners will not get an offer anywhere near the tax assessment. This is the case for almost all of Hampton Roads with the exception to some areas in Virginia Beach and Chesapeake.
This is a result of the the city’s failure to adapt to the current market. Even as home sales go down the city assessments continue to rise. This is simply because most city’s in Hampton Roads are tight on cash and cannot afford to lower tax assessments. The higher your property is assessed the more taxes they collect. If you feel that your property is assessed too high you have to go to your local city hall and request your property to be re assessed.
What is Market Value?
Market value is the prices that homes in your area have recently sold for in the past year or less. Ultimately, the market value of your home is based on what buyers are willing to pay for houses in your area. The easiest way to comp the market value of your house is to scavenge your neighborhood and see what homes similar to yours in size, condition. style and year built have sold for in the past year or less. When selling your house it is an absolute must that you research beyond the city assessment to determine your asking price. Many homes sit on the market for years because the asking price is too high because the homeowner list the house based on the city assessment. Click here to learn more about Market Value vs. Tax Assessed Value in Hampton Roads.