Property Tax Value

[Cowgirl]

What does it mean? I'm going to ask our realtor, but she hasn't called me back yet. The tax value (as of 7/08) is way below the asking price for a certain property. The tax value as of 7/09 is more than what it is now, but still well below asking price.

Is the tax value a legitimate reason to offer a low bid?

 

[Chasey_Lane]

Is the tax value a legitimate reason to offer a low bid?

I don't think you *need* a reason to offer a low bid. The sellers don't need to accept it. And who knows, maybe you'll get a good deal.

 

[Cowgirl]

I don't think you *need* a reason to offer a low bid. The sellers don't need to accept it. And who knows, maybe you'll get a good deal.

Well, I know we don't need a reason. I was hoping we could say "Well, the tax value is only X amount". :shrug: I'm just trying to figure out it the tax value has anything to do with the actual value.

 

[GWguy]

Well, I know we don't need a reason. I was hoping we could say "Well, the tax value is only X amount". :shrug: I'm just trying to figure out it the tax value has anything to do with the actual value.

Not really. The "tax value" is generally much less than the "appraised value". It's the appraised value that helps dictate the asking price of the home. Most Realtors can give you an estimated value based on their experience, but a true appraised value has to come from either a Realtor with that certification or the bank's appraiser.

 

[Tilted]

What does it mean? I'm going to ask our realtor, but she hasn't called me back yet. The tax value (as of 7/08) is way below the asking price for a certain property. The tax value as of 7/09 is more than what it is now, but still well below asking price.

Is the tax value a legitimate reason to offer a low bid?

They reassess the values every three years, however state law requires that any increase in assessed value must be phased in over a three year period. So, for the first year the new value will be the old value plus 1/3 of the amount the assessment went up. Then the next year it will go up by another 1/3. Then in the final year the new assessment will be fully phased in. In short, only the value for the last year is the actual assessed value.

All that having been said, the assessment value for a property isn't necessarily a good indicator of its market value. An appraisal would give a more accurate indication of market value. Appraisals and assessments are similar, but there are differences in how they are done. An appraisal should take into account more detailed information about the property and thus can be more accurate. Also, assessments can diverge a fair amount from the real market value due to the fact that they are only done every 3 years, and the market can change a lot in that time period.

Frankly, right now I would expect the assessed value to be higher than the real market value, depending on when the last assessment was. That won't be true in all cases, but it will in most.

 

[GWguy]

Go here:
Real Estate Valuations, Homes for Sale, Free Real Estate Information | Zillow Real Estate
and plug in the address of the house. You can find the current taxes, estimated value (based on speculation and surrounding homes/market) and a few other things.

 

[Cowgirl]

They reassess the values every three years, however state law requires that any increase in assessed value must be phased in over a three year period. So, for the first year the new value will be the old value plus 1/3 of the amount the assessment went up. Then the next year it will go up by another 1/3. Then in the final year the new assessment will be fully phased in. In short, only the value for the last year is the actual assessed value.

All that having been said, the assessment value for a property isn't necessarily a good indicator of its market value. An appraisal would give a more accurate indication of market value. Appraisals and assessments are similar, but there are differences in how they are done. An appraisal should take into account more detailed information about the property and thus can be more accurate. Also, assessments can diverge a fair amount from the real market value due to the fact that they are only done every 3 years, and the market can change a lot in that time period.

Frankly, right now I would expect the assessed value to be higher than the real market value, depending on when the last assessment was. That won't be true in all cases, but it will in most.

Thanks!

Go here:
Real Estate Valuations, Homes for Sale, Free Real Estate Information | Zillow Real Estate
and plug in the address of the house. You can find the current taxes, estimated value (based on speculation and surrounding homes/market) and a few other things.

Thanks. I went there, but they didn't have any estimate for that particular house.

 

[Tilted]

Well, I know we don't need a reason. I was hoping we could say "Well, the tax value is only X amount". :shrug: I'm just trying to figure out it the tax value has anything to do with the actual value.

The connection between assessed tax value and actual market value is fairly tenuous. It is probably not a good basis on which to make an offer.

 

[Tilted]

Thanks!

You're welcome.

 

[GWguy]

Thanks. I went there, but they didn't have any estimate for that particular house.

Uh oh... be careful.... this could be another Amityville house that only exists in another dimension....

 

[Cowgirl]

Uh oh... be careful.... this could be another Amityville house that only exists in another dimension....

Silly. The house was there, just not the estimate.

 

[DoWhat]

Frankly, right now I would expect the assessed value to be higher than the real market value, depending on when the last assessment was.

I would like to know the local area where that is happening.

 

[USWWarrior]

I cannot verify this is true but I was told by a real estate agent the assessed value for taxes is typically about 7 percent less than the true value of the home. Of course that is dependent on when the last assessment was done. A lot of people get caught off guard because the taxes are based on a "older" assessment at settlement then the following year their escrow did not cover the taxes/insurances.

Bottom line: They are related but not the same. Use your judegment, let the market decide a fair and reasonable offer. If it is too low, the owner should politely state so and counter offer. If you know the home is worth 350,000, dont be a jerk and offer 75,000. Make it reasonable and fair.

The thing homeowners have to be careful about is that you do not have too many options available to you when it comes to the "over" assessed value that is happening now. SO when you get an assessment from the county check it out and appeal if it does not seem right. I plan on doing it this year when I get my new assessment because I know it will be over inflated.

Smiles..one last thing.....when good old MOM said he was going to lower Maryland real estate taxes, what he didnt tell you is that the county would be increasing them to make up for the state provided shortage.

 

[BoyGenius]

Test Time!

I cannot verify this is true but I was told by a real estate agent the assessed value for taxes is typically about 7 percent less than the true value of the home. Of course that is dependent on when the last assessment was done. A lot of people get caught off guard because the taxes are based on a "older" assessment at settlement then the following year their escrow did not cover the taxes/insurances.

Bottom line: They are related but not the same. Use your judegment, let the market decide a fair and reasonable offer. If it is too low, the owner should politely state so and counter offer. If you know the home is worth 350,000, dont be a jerk and offer 75,000. Make it reasonable and fair.

The thing homeowners have to be careful about is that you do not have too many options available to you when it comes to the "over" assessed value that is happening now. SO when you get an assessment from the county check it out and appeal if it does not seem right. I plan on doing it this year when I get my new assessment because I know it will be over inflated.

Smiles..one last thing.....when good old MOM said he was going to lower Maryland real estate taxes, what he didnt tell you is that the county would be increasing them to make up for the state provided shortage.

How about a good scientific, real world test?

Take this list of foreclosures and distressed sales:

47294 AMANDA ST, PARK HALL, MD 20667-2609
List Price: $299,900
45900 HALSEY CT, CALIFORNIA, MD 20619-3066
List Price: $119,900
26914 BARTLETT ST, MECHANICSVILLE, MD 20659-2773
List Price: $171,475
47966 BEACHVILLE RD, SAINT INIGOES, MD 20684-3127
List Price: $138,548
20809 POPLAR RIDGE RD, LEXINGTON PARK, MD 20653-3049
List Price: $244,900
41915 STEPHEN YOUNG CT, HOLLYWOOD, MD 20636-2229
List Price: $204,900
22194 DONALDSON DR, LEXINGTON PARK, MD 20653-2907
List Price: $123,500
21832 RONALD DR, LEXINGTON PARK, MD 20653-2963
List Price: $121,000
37725 FRISCHHOLZ CT, MECHANICSVILLE, MD 20659-2657
List Price: $350,000
23255 JENIFER CT, LEONARDTOWN, MD 20650-2952
List Price: $517,000
30276 SUITE LANDING RD, MECHANICSVILLE, MD 20659-3637
List Price: $450,000
26471 REED RD, MECHANICSVILLE, MD 20659-5905
List Price: $219,900
45861 POTEAT CT, CALIFORNIA, MD 20619-3014
List Price: $70,900
41590 MISS BESSIE DR, LEONARDTOWN, MD 20650-2948
List Price: $424,900
41879 MILES CT, LEONARDTOWN, MD 20650-3938
List Price: $365,000
45482 WESTMEATH WAY #H11, GREAT MILLS, MD 20634
List Price: $139,400
21481 LYNN DR, LEXINGTON PARK, MD 20653-4125
List Price: $204,900
20915 HUNTING QUARTER DR, CALLAWAY, MD 20620-2016
List Price: $290,000
22513 CASTLE POLLARD WAY, GREAT MILLS, MD 20634-2457
List Price: $229,900
20950 OLEN MATTINGLY RD, AVENUE, MD 20609-2403
List Price: $429,900
18260 RIVER RD, TALL TIMBERS, MD 20690-2044
List Price: $395,000
21515 ROMINGER CT, LEXINGTON PARK, MD 20653-2755
List Price: $289,500
22740 TAYLOR LN, CALIFORNIA, MD 20619-3157
List Price: $200,000
44898 RICKLE HILL LN, CALLAWAY, MD 20620-2039
List Price: $219,000
45844 KETCH CT, LEXINGTON PARK, MD 20653
List Price: $359,900
45569 BOYNE CT, GREAT MILLS, MD 20634-2449
List Price: $259,900
21687 ENTERPRISE RD, LEXINGTON PARK, MD 20653-6612
List Price: $105,900
23875 MCINTOSH RD, HOLLYWOOD, MD 20636
List Price: $139,900
16809 THREE NOTCH RD, DAMERON, MD 20628-3206
List Price: $304,900

Then go out on the tax site and see how the banks are pricing these houses to get rid of them:

Real Property Search

The answer is they're generally using the tax assessment as the start point and it should wake some of you up, because if you live next door, unless the foreclosure is trashed, that's all your house is worth currently.

And keep in mind these generally get lower offers than their listed at by investors.

 

[BoyGenius]

Answers:

47294 AMANDA ST, PARK HALL, MD 20667-2609
List Price: $299,900
Tax assessment: 307,790

45900 HALSEY CT, CALIFORNIA, MD 20619-3066
List Price: $119,900
Tax assessment: 128,940

26914 BARTLETT ST, MECHANICSVILLE, MD 20659-2773
List Price: $171,475
Tax assessment: 219,520

47966 BEACHVILLE RD, SAINT INIGOES, MD 20684-3127
List Price: $138,548
Tax assessment: 125,420

20809 POPLAR RIDGE RD, LEXINGTON PARK, MD 20653-3049
List Price: $244,900
Tax assessment: 233,570

41915 STEPHEN YOUNG CT, HOLLYWOOD, MD 20636-2229
List Price: $204,900
Tax assessment: 248,240

22194 DONALDSON DR, LEXINGTON PARK, MD 20653-2907
List Price: $123,500
Tax assessment: 140,000

21832 RONALD DR, LEXINGTON PARK, MD 20653-2963
List Price: $121,000
Tax assessment: 136,690

37725 FRISCHHOLZ CT, MECHANICSVILLE, MD 20659-2657
List Price: $350,000
Tax assessment: 377,810

23255 JENIFER CT, LEONARDTOWN, MD 20650-2952
List Price: $517,000
Tax assessment: 476,310

30276 SUITE LANDING RD, MECHANICSVILLE, MD 20659-3637
List Price: $450,000
Tax assessment: 830,240

26471 REED RD, MECHANICSVILLE, MD 20659-5905
List Price: $219,900
Tax assessment: 273,990

45861 POTEAT CT, CALIFORNIA, MD 20619-3014
List Price: $70,900
Tax assessment: 134,800

41590 MISS BESSIE DR, LEONARDTOWN, MD 20650-2948
List Price: $424,900
Tax assessment: 399,730

41879 MILES CT, LEONARDTOWN, MD 20650-3938
List Price: $365,000
Tax assessment: 384,190

45482 WESTMEATH WAY #H11, GREAT MILLS, MD 20634
List Price: $139,400
Tax assessment: 172,920

21481 LYNN DR, LEXINGTON PARK, MD 20653-4125
List Price: $204,900
Tax assessment: 226,110

20915 HUNTING QUARTER DR, CALLAWAY, MD 20620-2016
List Price: $290,000
Tax assessment: 330,840

22513 CASTLE POLLARD WAY, GREAT MILLS, MD 20634-2457
List Price: $229,900
Tax assessment: 250,170

20950 OLEN MATTINGLY RD, AVENUE, MD 20609-2403
List Price: $429,900
Tax assessment: 631,550

18260 RIVER RD, TALL TIMBERS, MD 20690-2044
List Price: $395,000
Tax assessment: 367,370

21515 ROMINGER CT, LEXINGTON PARK, MD 20653-2755
List Price: $289,500
Tax assessment: 265,440

22740 TAYLOR LN, CALIFORNIA, MD 20619-3157
List Price: $200,000
Tax assessment: 171,300

44898 RICKLE HILL LN, CALLAWAY, MD 20620-2039
List Price: $219,000
Tax assessment: 334,250

45844 KETCH CT, LEXINGTON PARK, MD 20653
List Price: $359,900
Tax assessment: 385,320

45569 BOYNE CT, GREAT MILLS, MD 20634-2449
List Price: $259,900
Tax assessment: 233,010

21687 ENTERPRISE RD, LEXINGTON PARK, MD 20653-6612
List Price: $105,900
Tax assessment: 111,180

23875 MCINTOSH RD, HOLLYWOOD, MD 20636
List Price: $139,900
Tax assessment: 220,260

16809 THREE NOTCH RD, DAMERON, MD 20628-3206
List Price: $304,900
Tax assessment: 204,030

 

[Tilted]

I would like to know the local area where that is happening.

That's why I said depending on when the last assessment was done. Every county in the state is broken into 3 sections, and the state assesses property values in one section each year. Because the value of a given property only gets assessed once every 3 years, and because part of the calculation is based on an analysis of sales prices for comparable properties at the time the assessment is done, it tends to be a lagging indicator of market value.

When sales prices have been going up for a while, the assessments will tend to be lower than the actual market value. When sales prices have been going down for a while, the assessments will tend to be higher than the actual market value.

Also, I was talking about the actual full assessment value, and not the lower, partially phased-in assessment value that is indicated on 2/3 of property tax bills. Assessments that were done in 2006 and 2007 should, on average, reflect a higher value than the current realistic market value of the property (most people probably still have an inflated notion of that value for their own home). Some assessments will no doubt be lower, even if they were done in 2006 or 2007, due to the crudeness of the assessment process. They don't take into account a lot of specifics about each property (e.g. the quality of fixtures, the quality of cabinets, the quality and kind of flooring and various other amenities); therefore, in addition to the lagging nature of assessments, they can be inaccurately high or low with regard to a particular property. In St. Mary's County, assessments were done in the western parts of the county in 2006, and in the middle of the county in 2007.

I cannot verify this is true but I was told by a real estate agent the assessed value for taxes is typically about 7 percent less than the true value of the home. Of course that is dependent on when the last assessment was done. A lot of people get caught off guard because the taxes are based on a "older" assessment at settlement then the following year their escrow did not cover the taxes/insurances.

That was probably true a couple of years ago when average sales prices had been increasing for a while. Also, it would have meant that on average the assessments were 7% lower, while on individual properties an assessment may have been somewhat high or somewhat low.

The point about people being caught off guard is certainly valid - especially since the previous owner is often realizing a large tax savings due to the Homestead Credit, which the new buyer wouldn't get.