It’s that time of year again, when homeowners (at least in the city of Harrisonburg) are receiving notices of the reassessment of their property. As you strive to understand the new, or current, assessment of your property, let’s have a brief refresher course on real estate assessments.
First, many people (erroneously) believe that the assessment of their property is an indication of their home’s value.
In actuality, the assessed value of a property is the value assigned to the property by the local assessor’s office, for the purpose of determining how much you will pay in taxes.
Certainly, the assessed value is intended to be the precise value of your home — but it is quite possible that there is a disparity in this assessed value and market value. The market value of your home is the price at which it would sell in the current market.
Sale Prices Vs. Assessed Values In The City Of Harrisonburg
To better understand how assessed values relate to market value, I checked on the 2014 assessed value for each of the 328 properties that sold between Jan. 1, 2013, and Nov. 30, 2013.
What I discovered, is that properties in Harrisonburg sold, on average, for 97 percent of their assessed value.
Looking a bit deeper, just over a third of city properties (39 percent) sold within 5 percent of their assessed value — the remaining 61 percent had a sales price that was more than 5 percent higher or lower than the assessed value.
Sale Prices Vs. Assessed Values In Rockingham County
Performing the same analysis in Rockingham County, we discover that county properties are selling for slightly more than their assessed value (average of 106 percent) as compared to city properties that are selling for a bit less than their assessed value (average of 97 percent).
Given the great variation in assessed values and market values, homeowners should not rely on their tax assessment for an understanding of their property’s value.
Furthermore, homebuyers should not rely on assessed values to guide them in understanding the market value of a home that they might purchase.
Both buyers and sellers should strive to understand the market value of a particular piece of real estate my analyzing similar homes that have recently sold and those currently on the market in a given neighborhood or price point. The relationship between assessed values and sales prices varies based on the price, size, age and location of the home.
For a more thorough analysis of the topic, visit HarrisonburgAssessments.com.
Scott P. Rogers, author of HarrisonburgHousingToday.com, is an associate broker with Funkhouser Real Estate Group in Harrisonburg.