There is a lot of information you can find online. But you also need to understand and be able to interpret the information correctly. Recently, I had a client mention to me that a home they were interested in was vastly overpriced. I asked how they knew this and they mentioned that the sales price was almost double the assessed value.
Now, I can understand the confusion, surely the home would be sold for the assessed value. Well the answer is no! The fair market value, or an appraised value does not equal the assessed value in most cases.
First, what is the assessed value? Each county in Pennsylvania places an assessed value upon a home so that all properties are taxed equally and fairly. The value is equal to the fair market value only in the base year. This value is often re-assessed as a result of a lawsuit and a judge requiring a county to reassess all the properties in the county to maintain fairness. It has just happened in Delaware County.
In Chester County our base year is 1996, properties are assigned a value that would have been 100% in 1996. New construction homes are often over assessed and need to be appealed making sure that the common level ratio was applied to give a fair assessed value.
This assessed value is then used to apply millage rates to a property to charge the correct tax for County, Township and School Taxes.
So the assessed value is not the fair market value for your property, what your home would sell for. It is the value that the county deems it would have sold for in 1996. The common level ratio used to determine this is calculated each year by the Pennsylvania State Tax Equalization Board and published in mid-Summer for each county.
Therefore, as you can see knowing the assessed value and knowing the asking price for a home are different, does not mean the asking price is necessarily out of line. The asking price is the fair market value or close to it for the home and the market, buyers decide what that final price will be by making an offer via an agreement of sale which when accepted by the seller become a contract to purchase. Once the home closes for the sales price, it then becomes a comparison sale for other homes of similar type in the neighborhood. This allows buyers and sellers to determine if the next home they are looking at is fairly priced or not.
Knowing the assessed value and the ratio of recent sales to the assessed value can help price a home along with other steps. I think this is part of the method that many of the automated valuation sites use to give a proposed value for a home without seeing or knowing anything about the home.
You could use the common level ratio and multiply the assessed value to give an idea of fair market value to potentially give an asking price. But there is always more that goes into pricing a home.
If you are thinking of selling your home in or around the Main Line or Chester County contact Nick Vandekar, Selling the Main Line at Long & Foster Real Estate Inc., office 610-225-7400, cell or text 610-203-4543, Nick@VandekarTeam.com. Let's discuss the value of your home and let me explain how I market your home.