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Tax Assessment vs Market Value | Why is the Tax Assessed Value Different than the Sales Price? - YouTube
Channel: Matt Leighton
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How's it going everyone? Matt Leighton and welcome back to another video.
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In this video, we talk about how I need to buy sunglasses...No I'm just kidding.
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In this video, we talk about the tax assessment and why that might be different than the sales price.
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I'm here in Penrose in Arlington, Virginia. Cool little patio, little outdoor area in the summer.
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In the warmer months it is very popular. It's actually 60 degrees in December so pretty warm right now.
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Let's get into the tax assessment. First of all,
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What is the tax assessment?
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— The assessed value is used for tax purposes.
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The assessor usually doesn’t visually inspect
the subject home or the comparable homes.
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So any updates are most likely not taken into
consideration.
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They have their own calculation for coming
up with the assessment.
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They simply look at the size of the home,
the number of bedrooms and bathrooms, and
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if there have been any permits issued for
larger renovations, that would affect the
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assessment as well.
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If other homes in the neighborhood or in your
condo building sell, those sale prices are
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taken into consideration.
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The assessment is only updated once a year
so at least in Arlington County, the assessment
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is always chasing the sales price, and the
assessment is always behind.
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The assessment is determined by the county
and updated every year.
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For example, for 2017 the property tax rate
was decreased by a half a cent from .996 to
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.991, however, the overall real estate assessment
was increased 2.8%.
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So initially it looks like you’re saving
money on your taxes, because the rate at which
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you are being taxed is lower, however with
rising property values comes rising property
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taxes.
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Now let’s compare that to the sales price.
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Because as an informed buyer, you might look
at the tax record and say this property is
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only assessed for $350,000.
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Why would I pay $400,000?
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Well keep in mind that the assessment has
literally nothing to do with the sales price
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or the market price of the property or condo.
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Improvements and current market condition
are not factored in.
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Occasionally, you might get a knock on your
door from someone in the county real estate
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office asking to inspect the property for
appraisal reasons but this is a very rare
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occurrence.
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I think there is one way to look at the sales
price and tax assessment that can help you
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out as you’re looking to make an offer on
a home.
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And that is if two comparable properties come
on the market.
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You can compare them to their respective tax
assessments.
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So 2 similar condos in the same building come
on and one is priced higher than the other…is
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the higher one also tax assessed for a higher
amount?
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It should be.
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It could be a way to find out if one property
is over-priced.
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That being said, you should rarely consider
the tax assessment while you are looking at
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real estate.
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The county tax assessor does not determine
the value of how much a property will sell
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for.
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The buyer and the bank determine how much
a property is worth.
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Yeah the seller lists it for a certain price.
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But the final say comes down to the buyer
and the bank.
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The assessment just goes on in the background
and if anything it’s more of a distraction.
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Here in Arlington County, the assessment is
just about always less than the sales price.
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Meanwhile in Alexandria, the assessment is
just about always more than the sales price.
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It’s a tax, it’s not market value.
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Look at recent homes that have sold, don’t
worry too much about the assessment value
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when you’re considering writing an offer.
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The assessment is an afterthought.
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So to summarize, why is the assessment different
than the sales price?
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Well, the assessment is only done once a year
so it’s not with the current market, the
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assessor doesn’t go into your house, and
one thing I didn’t even mention is that
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the assessment could just be wrong.
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They could have the wrong number of bedrooms
and bathrooms listed for your home.
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If you don’t like your assessment, you can
file an appeal.
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Don’t complain to your friends and do nothing
about it.
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Present your case and complain formally to
your jurisdiction and maybe they will lower
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your assessment.
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Ok thanks for watching this video on why the
assessment is different than the sales price.
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Until next time, create a productive day.
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Take care.
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