Potomac Homes For Sale Q & A: Assessed Value Vs. Fair Market Value
This is a Potomac Homes For Sale Q & A for both buyers and sellers. I can't count how many times I have been asked the following question:
Q: What is the difference between Assessed Value and Fair Market Value of a home?
A: Typically I do a good amount of research before I write a post. This time my research comes in the form of another Realtor, Bill Gassett of Metrowest Massachusetts Real Estate. Bill has written a thorough, professional and easy to understand explanation of The Difference between Assessed Value and Fair Market Value in residential real estate. His essay may focus on Massachusetts buyers and sellers but it rings true for all of of us! Click on the link above to read his entire post!
I really want my readers to fully grasp the difference between Assessed Value & Fair Market Value so here goes:
An Assessed Value is the valuation placed on a property by a public tax assessor for purposes of taxation i.e. Montgomery County. Fair Market Value on the other hand is the agreed upon price between a willing and informed buyer and seller under usual and ordinary circumstances. It is the highest price which the property will bring when exposed for sale to the market to a buyer who is purchasing with full knowledge of the properties highest and best use.
There is not a correlation between Assessed Value and Fair Market Value but often uninformed buyers and sellers will use the assessed value of a home as support. When the assessed value is high, Sellers think their home is worth more and when the assessed value is low, Buyers want their offer to match the assessment. It just doesn't make sense. There are also a fair amount of websites available to consumers like Zillow that are sharing values (Zestimates) in neighborhoods and zip codes that are bogus so beware. We have had sellers ask us to change the zestimates on their homes. As much as I like to think The Schuman Team has clout, we don't have the power to change a zestimate. Think of it as a red herring altogether!
The best place to find examples of Fair Market Value is Market Comparables. Take a look at what has sold over the past 6 months in your neighborhood and area and that should be your first indication. If your home is unique you may need to expand your geographical parameters or the time frame (from 6 to 12 months) to find comps. Our market has been changing every 3-6 months so looking back over 6+ months may not always be an accurate prediction of value.
As always, my best advice when considering a home purchase, sale or both is to hire a savvy, qualified realtor that can help you navigate the real estate market and find you the best opportunity given your particular situation. Call The Schuman Team if you would like to know the Fair Market Value for your home!
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