In most jurisdictions, tax assessments happen every few years (and often in the first year you own your home). What should you do if you are unhappy with your new assessment? Consider appealing it. Experts estimate that up to 60 percent of home assessments are too high and about one-third of all property tax appeals succeed. They key is to act promptly because there's always a time limit to file an appeal.
Get your property card. The first thing to do is to ask your assessor's office to see your property card. The property card shows all the information on your home and land. Ensure its accuracy since the lot size, house square footage, number of rooms, bedrooms and bathrooms enter into the assessment. Make sure the card doesn't describe more house or land than you own. If the property card is incorrect, you may get your assessment changed without a formal appeal. Check for an error in the tax rate for your home as well. Jurisdictions often have different tax rates for homes with rentable spaces, homes zoned for commercial use, homes in a historic district, or other provisions. Be sure your property is being charged the correct tax rate.
Check the market value. If your property card checks out correctly, check on your home's market value. Assessed values are based on a percentage of market value which may be listed on your assessment or supplied by your tax assessor's office. If you have had a recent home appraisal to refinance your home or to get a home equity line of credit, you may be able to use it as evidence of market value. It may also help to search online for sites that show what homes in your neighborhood sell for. You may have a good case for reducing your assessment if you find similar homes at lower values.
Compare your assessment. Check your assessor's list of homes in your area and look for homes with similar features, such as square footage or lot size, that have lower assessments. Next, check for homes with similar assessments that are bigger or have more land.
Although new homeowners can't do much to argue market value (since it's usually established by the purchase price), they should look at their property card to make sure it contains the right information for future assessments.
Hilary Basile is a writer for MyGuidesUSA.com at http://www.myguidesusa.com, you will find valuable tips and resources for handling life's major events. Whether you're planning a wedding, buying your first home, anxiously awaiting the birth of a child, contending with a divorce, searching for a new job, or planning for your retirement, you'll find answers to your questions at MyGuidesUSA.com.
Friday, February 22, 2008
Tax Assessment And Appraisal Value
If you are in the home buying or selling market, it’s important to understand the difference between tax assessment and appraisal value. Concentrate on the appraisal value because this determines your asking price.
Understanding Tax Assessment
The tax assessment is a tool local governments use to exact a property tax rate on residents. The local government determines your home’s worth by reassessing the homes in the area you live in periodically. Some areas reassess every 2-3 years. But with today’s booming real estate market, the National Association of Realtors estimates 60-70% of U.S. tax assessments do not reflect the escalating market value on home sales. This is why the tax assessment is not always an accurate gauge of true home worth.
Tax assessment offers a general idea of home value. If you are curious about whether your tax assessment office is keeping up with the local market, telephone your local real estate board and local tax assessment office. Ask them about the local appreciation value on homes to determine if they are up-to-date.
Focus on the Appraisal Value
Home sellers should concentrate on the appraisal value, because a mortgage lender will write a loan on the home for this amount. Location is the prime factor in appraising a property. An appraiser will look at three homes that sold during the previous three-month period to determine what similar properties have sold for in the same neighborhood. If your home is in a rural area, or if the sales in your area have been sluggish, the appraiser can go within a five mile radius to locate similar homes for comparison. If there is home value inflation in the area, the appraiser will factor this in. A good appraiser will contact the realtor who sold the homes he or she is using as a comparison.
What Do Appraisers Look For?
An important rule of thumb of real estate is: location, location, location. Appraisers are mainly focused on the following to determine home worth:
* square footage
* condition and age of the home
* location
* lot size
* number of bedrooms
* number of bathrooms
* total number of rooms
* garage(s)
* decks
* screened porches
* fireplaces
Secondary Enhancements Help a Home Sell
There are other bells and whistles the appraisers may factor in, but their impact on home value is marginal. Although these improvements do help the home sell, they do not impact the appraisal significantly.
Here are some examples:
* ceramic tile
* hardwood floors
* crown molding
* chair railing
* specialty counter tops, cabinetry
* sprinkler system
* wainscoting
* upgrades in light fixtures
* upgrades in faucets, sinks, tubs and showers
* swimming pool
Sell Your Home Quickly
Do not be mistaken -- upgrades are worthwhile because they will help sell your home quickly. For example, eye-catching landscaping will lure people in to look at the home, because 80% of homebuyers decide if they like a house when they first drive up to the property.
When do I Need an Appraisal?
Home sellers may want to pay for a professional appraisal so they know the true value of their home, but they are not required to have an appraisal. Your realtor will determine an asking price with you. To determine a fair and marketable price for your home, expect your realtor to research comparable home sales on Multiple Listing Services (MLS). Homebuyers are required by the lender to have an appraisal done and they must pay an average of $300-500 for it. Payment is due at the time of the appraisal. The buyer does not have the right to choose the appraiser -- the lender does this. Loan officers keep an approved list of appraisers on hand.
Research on Home Value
While conducting research on home value consider this: Is the neighborhood you live in completely built out, or are you competing with new homes still being built? If you are putting your home on the market and would like to conduct some of your own research, you can do one of three things. Visit the courthouse in your county and see what has sold in your area that is similar to your home. Call your local realtor and ask for a comparative market analysis. Or, visit open houses in your neighborhood which are similar to your own, to see what they are selling for. All of these activities are a good education for homeowners interested in learning the value of their home before placing it on the market or refinancing.
Understanding Tax Assessment
The tax assessment is a tool local governments use to exact a property tax rate on residents. The local government determines your home’s worth by reassessing the homes in the area you live in periodically. Some areas reassess every 2-3 years. But with today’s booming real estate market, the National Association of Realtors estimates 60-70% of U.S. tax assessments do not reflect the escalating market value on home sales. This is why the tax assessment is not always an accurate gauge of true home worth.
Tax assessment offers a general idea of home value. If you are curious about whether your tax assessment office is keeping up with the local market, telephone your local real estate board and local tax assessment office. Ask them about the local appreciation value on homes to determine if they are up-to-date.
Focus on the Appraisal Value
Home sellers should concentrate on the appraisal value, because a mortgage lender will write a loan on the home for this amount. Location is the prime factor in appraising a property. An appraiser will look at three homes that sold during the previous three-month period to determine what similar properties have sold for in the same neighborhood. If your home is in a rural area, or if the sales in your area have been sluggish, the appraiser can go within a five mile radius to locate similar homes for comparison. If there is home value inflation in the area, the appraiser will factor this in. A good appraiser will contact the realtor who sold the homes he or she is using as a comparison.
What Do Appraisers Look For?
An important rule of thumb of real estate is: location, location, location. Appraisers are mainly focused on the following to determine home worth:
* square footage
* condition and age of the home
* location
* lot size
* number of bedrooms
* number of bathrooms
* total number of rooms
* garage(s)
* decks
* screened porches
* fireplaces
Secondary Enhancements Help a Home Sell
There are other bells and whistles the appraisers may factor in, but their impact on home value is marginal. Although these improvements do help the home sell, they do not impact the appraisal significantly.
Here are some examples:
* ceramic tile
* hardwood floors
* crown molding
* chair railing
* specialty counter tops, cabinetry
* sprinkler system
* wainscoting
* upgrades in light fixtures
* upgrades in faucets, sinks, tubs and showers
* swimming pool
Sell Your Home Quickly
Do not be mistaken -- upgrades are worthwhile because they will help sell your home quickly. For example, eye-catching landscaping will lure people in to look at the home, because 80% of homebuyers decide if they like a house when they first drive up to the property.
When do I Need an Appraisal?
Home sellers may want to pay for a professional appraisal so they know the true value of their home, but they are not required to have an appraisal. Your realtor will determine an asking price with you. To determine a fair and marketable price for your home, expect your realtor to research comparable home sales on Multiple Listing Services (MLS). Homebuyers are required by the lender to have an appraisal done and they must pay an average of $300-500 for it. Payment is due at the time of the appraisal. The buyer does not have the right to choose the appraiser -- the lender does this. Loan officers keep an approved list of appraisers on hand.
Research on Home Value
While conducting research on home value consider this: Is the neighborhood you live in completely built out, or are you competing with new homes still being built? If you are putting your home on the market and would like to conduct some of your own research, you can do one of three things. Visit the courthouse in your county and see what has sold in your area that is similar to your home. Call your local realtor and ask for a comparative market analysis. Or, visit open houses in your neighborhood which are similar to your own, to see what they are selling for. All of these activities are a good education for homeowners interested in learning the value of their home before placing it on the market or refinancing.
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