Buyer Question: What is Taxable Value?

By
Real Estate Agent with Cedar Rapids/Iowa City, IA KW Legacy Group S44645

I received an email this morning from one of my buyer clients:

Hi Karen,

In some of the listings that I get there is a position called Taxable Value, which sometimes has a number, and sometimes it doesn't. Also, it is usually more than the List Price.  What is that Taxable Value?

This is a great question, and one that comes up often in a buyer's home search. Let's break it down into sections.

First, the reason that there is sometimes a number and sometimes not is:

Taxable Value is a field in our MLS that is NOT required, so that is why you will not always see a number there.  If the agent does not put it on the listing contract, it is public record and easy to find yourself.  If the property is in Cedar Rapids, you will go to the Cedar Rapids Assessor Website at:

 http://www.cedar-rapids.info/assessor

 If the property is located outside of Cedar Rapids, such as in Marion, Hiawatha or Robins, but in Linn County, you will need to visit the Linn County Assessor Website at:

http://linn.iowaassessors.com/

Second, the Taxable Value vs. the List Price:

Although most of the properties that you are looking to buy fall into the category of the list price being LESS than the Taxable Value, this is not the usual trend.  Because you are looking at homes that are in short sale, or foreclosure, you will often see these values flipped.  In a normal residential sale, the list price or market value, will be slightly higher, up to 10-15%, than the Taxable Value.  This is especially true with properties that have been improved recently and the taxes have not yet been adjusted.

The above websites will give you all of the information that you need, including the Taxable Value Assessment for the last few years, so you can see if the property has been increasing or decreasing in value.

So lastly, What is Taxable Value? 

The taxable value is the amount that the property is taxed.  Meaning that you want your home to have the lowest possible taxable value.  Taxes differ even within our city due to school district bonds, age of the homes, finished square feet, and size of your lot. 

A few short years ago, it was much more common to see homes that were selling for 15% or more than the Taxable Value.  This was before the decade adjustment that brought the values back into line in our county. In short, the taxable value has absolutely nothing to do with the appraisal or market value of a property.  Some properties are over-taxed, meaning that due to the school district, the taxable value is much higher than what the home will sell for in the current market.  This is where the homeowner can argue to have their taxable value adjusted lower based on recent sales in the area that they live. 

Hopefully, this information will help you to understand what taxable value is and how it relates or does not relate to the market pricing of a home that you are considering.  When you decide to purchase a home, I will go over the most recent sold comparables in the area to determine the best price to offer in the current market.  We will discuss these in depth before making an offer as these same properties will be used by the lender's appraisal to determine the value of the home.  Remember-You must have the appraiser's blessing in order to secure financing! 

Please call me when you are considering purchasing a home and we will negotiate the best price for you in the current market!

Keep smiling!

Karen

 

 

Posted by

 

Karen Feltman, REALTOR®, ABR, AHS, CHMS,                                                                      CNE,CRS, e-Pro, green, GRI, SRES, TRC

Keller Williams Legacy Group

4850 Armar Drive SE Ste B

Cedar Rapids, Iowa 52403

Email: karenfeltman@gmail.com

Mobile  319-521-0701

www.KarenFeltman.com

Licensed in the State of Iowa

© 2010-2018 by Karen Feltman, Cedar Rapids/Iowa City Relocation Specialist 

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Rainer
25,714
Jeff Lundquist
United Country Premier Real Estate - Annandale, MN
Jeff Lundquist

Taxable value has always been an objection to overcome here in our area. When it was lower than listing price buyers were asking about it. Now that taxable value is higher sellers are wondering about it.

Jan 06, 2011 03:17 AM #1
Rainmaker
528,812
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

@Jeff-You are right that no matter what, buyers wonder how the taxable value correlates with the market value or listing price....in some cases, they want to know why it is lower because then they think the property is over-priced, which is NOT necessarily the case.....if it is higher, than they wonder what is wrong with the house, or is it over-taxed.  All you can do is explain that you want to have the lowest taxable value that you can to base your yearly taxes on, but the market value is what is really important when you purchase a home.  Thank you for reading!

Jan 06, 2011 08:55 AM #2
Rainmaker
449,843
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Karen, very good explanation of tax value. Here nothing sells for tax value. We had  revaluation here in 2007, so clearly everything here is valued above the market price. I think the hardest thing for people to understand is in reality the value does not matter that much, as long ones home is valued about the same as comparable homes in the neighborhood. The taxing agency is going to tax at whatever rate it takes to give them the money they think they need. Thus if everybody in a neighborhood has comparable value for comparable homes and every neighborhood is valued with the same measuring stick everyone will pay their fair share.

Jan 06, 2011 11:54 AM #3
Rainmaker
528,812
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

@Tom-You are right that sometimes this is the biggest "negotiating" position for inexperienced buyers.  Since it is all part of public record, the buyers think that they can use this as the market value and sometimes, that is just not the case at all.  In today's world where so much information is available online, it is still necessary for buyers to have a knowledgeable REALTOR that can explain how MARKET value is determined.  It is not based on what the sellers paid for it, it is not based on what they have done since they owned it....it is based on what has sold in the last 60-90 days that is about the same age, square footage, and amenities! 

Jan 06, 2011 12:03 PM #4
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Karen Feltman

Relocation Specialist in Cedar Rapids, Iowa
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