Is there a reason my home’s assessed value differs compared to the market value?

When you buy a home, it can be exciting. After all, this is where you’ll be spending the bulk of your life. You want to feel confident that you got a good deal and are protected from any potential financial risks. If there’s one thing that can dampen your spirits, it’s seeing how much your home is worth compared to the market value. In most cases, this won’t be an issue for most people. You may even see things in your favor because of certain aspects in your home or neighborhood. Despite this, some homes will appreciate at a slower rate than others simply because of their assessed values and other factors outside of your control. What you may not know though, is that there are reasons why your home may appreciate at a slower pace than the market value. 

Let’s explore the various factors that can have an impact on your assessed value and how they might help you in the long run if you do everything right...

What is Assessed Value?

Assessed value is the assessed market value of a property. Assessed values are based on a formula that is used by municipalities  to establish tax rates for properties. Assessed values are calculated by taking into account the market value of your home as well as other factors, including the cost of living in your area and how much it would cost to build or enlarge your home.

In most cases, assessed values are usually much lower than market values because they take into account all these different factors. It’s important to note that assessed values can be adjusted over time, so if you buy a house worth $500,000 today and have it appraised at $600,000 six years from now, the assessed value will likely increase with inflation (assuming no improvements have been made).

The reason why most assessments aren’t always based on market value is because of changes in municipal tax rates over time. Some municipalities might change their tax rates every year or every other year. This could also happen if a city or county has a new mayor who wants to decrease taxes for homeowners.

What determines your Assessed Value?

Assessed value is the value assigned to your home by the municipal assessor. Assessors determine this value based on what the home is worth in the market place. In some municipalities, assessors can have more discretion in determining your assessed value than in others. Additionally, some properties are automatically assessed at a lower or higher assessed value based on certain factors. Your assessed value might be different than your market value if you’re living in a rural area where homes are more affordable or if there are a lot of vacant lots around your property that affect its assessment.

Your home’s Location and Demographics

The market value of a home will be influenced by the location of your property. Just because you bought a home in a good location doesn’t mean it will appreciate at the same rate as another property that is further away from the city center. Additionally, the demographics can play a role in how much your home will appreciate. If you bought a home in an area where homes are more expensive, it could take longer for yours to appreciate in value.

Your home’s assessed value may also be affected by other factors outside of your control, like how well-maintained it is or its size. If you do everything right with your home or if there is something about the property that doesn’t have anything negative to say about it, then this might help keep the appreciation rate slower than what you would see on the market value. In some cases, people who invested in their homes and remodeled them in order to increase their appeal might not see any appreciable growth in their assessed values, though they do see improvements in their market values.

How much did you pay for your home?

The first thing to consider is how much you paid for your home. If you paid a lot of money for your home, it’s likely that the assessed value will be higher than the market value. This can be good or bad depending on what you’re looking for. If your home was bought at an inflated price because of its location, then that means it won’t appreciate as fast. However, if your home was purchased from a reputable real estate agent who knows the market well, then that might mean that the assessed value is lower than what you’re actually paying on your mortgage each month.

Home Improvements and Upgrades

If you want to sell your home, it’s crucial that your home is in the best condition possible. Updating and improving your living space is a great way to increase the value of your home without having to spend a lot of money. For example, landscaping can improve curb appeal, which can lead to higher property values. Plus, new carpeting in a high traffic room can make a significant difference. You should also consider investing in soundproofing or adding solar power to improve how much your home is worth.

Blemishes, defects or damage to the structure or exterior of your home

A home that is structurally sound and free of blemishes, defects, or damage in the exterior can still appreciate at a slower pace than a home with these types of problems. It’s important to pay attention to the condition of your home before you buy it so you know what kind of potential problems may be lurking. Before making an offer on your new home, ask your real estate agent for a walk-through and make sure that the house is structurally sound and without any visible defects or blemishes.

Other factors that can determine your Assessed Value

There are a few other factors that can have an impact on your assessed value. For example, the school district where you live and the location of the property.

By taking careful consideration of these other factors, you might manage to increase your assessed value in the long run. However, this isn’t always possible.

-School districts: The most important factor for increasing your assessed value is whether or not you live in a school district that has an increased tax rate. If you live in a high tax rate district, it can be difficult to increase your assessed value because of how fast taxes rise over time.

-Location: Generally speaking, homes will appreciate at a slower rate than other areas because they don’t benefit from marketing efforts like those in popular tourist areas.

Wrapping up: Is there anything you can do to help increase the appreciation of your home?

There are a few different things you can do to help increase the appreciation of your home, but it’s not always easy. First off, make sure you have a good assessment. Your assessor will be able to give you an accurate worth of your home and what it would cost in terms of repairs and improvements. If you have problems with your roof or other structural issues, talk to your assessor about what needs to be done before selling. You want to be sure that everything is in good condition.

Second, if you live in a neighborhood that’s experiencing gentrification and higher demand than supply, it could push up the price of homes in that area as well as yours. There are also many factors that cause the market value for a home to fluctuate based on location (e.g., proximity to the office, professional sports team). 

That said, there are still many ways you can help increase the appreciation of your home, so try these things out!

The blog post discusses how some homeowners might see their assessed values lower than what they think their home should be worth due to certain factors outside of their control.