Why is the sold price not equal to the assessed value?

By
Real Estate Agent with Long & Foster Real Estate Inc 610-225-7400 PA License - AB067198

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.

 

Posted by

 

Nick Vandekar
Nick is a Tredyffrin Easttown Residential and Commercial REALTOR selling The Main Line, Chester, Delaware and Montgomery Counties.

Giving you the confidence to make
the right decisions.

92 Lancaster Avenue
Devon , PA 19333
SellingTheMainLine.com
Mobile: (610) 203-4543 [call or text me]
Email Me

 

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If you are buying or selling on or around
Tredyffrin Easttown or along the Main Line, 
we can help you, contact us.

Comments (18)

Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Nick, with available information the public takes this information and runs not knowing some or all could be wrong.

Oct 03, 2022 02:27 PM
Kathy Streib
Cypress, TX
Home Stager/Redesign

Hi Nick- great answer to a question that I'm sure is asked by many buyers. Pricing a home takes more than looking at stats. 

Oct 03, 2022 05:55 PM
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

This is a really good explanation and I feel bad for those that think the assessed value is a good indicator of the value of their home or believe what zillow says their home is worth, haha.

Oct 04, 2022 04:43 AM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker/REALTOR® - Kalispell, MT
Helping your Montana dreams take root

The value that is used for calculating property taxes is often totally different than the market value. Good point!

Oct 04, 2022 05:11 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Good morning, Nick... because of how property taxes are determined in the Carolinas, there really is no relationship between assessed value and market value here. It's something I'm always explaining to people who are moving here from areas where there is a relationship.

Oct 04, 2022 05:12 AM
Roy Kelley
Retired - Gaithersburg, MD

This is good information to share.

Have a great day and a very productive week.

Oct 04, 2022 07:26 AM
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Joan Cox so often the public has the information, but does not know how to interpret it correctly.

Kathy Streib I believe as Realtors one of our tasks is to provide explanations for all the information that is out there. That is why my tag line is "Giving you the confidence to make the right decision". Through understanding the information correctly, they can make the right decisions.

Brian England they believe what they see, and hear, not always understanding the connections between all these different values.

Kat Palmiotti so many different values get tossed around, and the public does not understand the differences.

Nina Hollander, Broker interesting, how are taxes calculated in N. Carolina, you need to write a post.

Oct 04, 2022 07:31 AM
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Roy Kelley thanks for stopping by, stay dry and warm.

Oct 04, 2022 07:38 AM
Roy Kelley
Retired - Gaithersburg, MD

We have a chilly and rainy day in Maryland. A good time to enjoy a good book by the fire.

Oct 04, 2022 07:43 AM
Kathy Streib
Cypress, TX
Home Stager/Redesign

Oct 08, 2022 05:51 PM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Nick. In the game of numerical soup, you have to be the chef who can identify the included ingredients. Great job. Enjoy your day.

Oct 09, 2022 05:11 AM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
Relocation to NW AZ with elbow room & more freedom

A simple and thoughtful explanation, thank you Nick Vandekar, 610-203-4543 Then there is always the appraised value of the home which is higher than the assessed value and lower, equal or higher than the contractual price.  Buyers and even sellers can be easily confused and again the value we bring as professionals.

Oct 09, 2022 06:11 AM
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Roy Kelley I have been working my way through a plethora of books. Picked up another one of your recommendations Friday. Working on a Steve Berry book right now.

Kathy Streib thank you again, for the feature.

Wayne Martin so many things the clients do not understand, that is why they use a Realtor.

Leanne Smith exactly, and they need to understand all the differences.

Oct 09, 2022 08:10 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

In our state, every 5 years there is an adjustment in assessments, with a full interior appraisal every 10 years. The assessed value is seldom comparable to the appraised or sold prices.

Oct 09, 2022 03:29 PM
Emily Medvec
eXp Realty LLC - Santa Fe, NM
Broker | Realtor | Serving Santa Fe & Northern NM

Great topic Nick Vandekar, 610-203-4543 ! In New Mexico, property tax is collected in arrears which is the first problem when prospective Buyers start looking for any value other than the asking price. Next, New Mexico is a non-disclosure state for some of this information. Like Leanne Smith mentioned earlier, I discuss the value of appraisal and inform them with an estimate of future property tax.

Oct 09, 2022 04:58 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

When you factor in that every price is based on what people are willing to pay for it in a given market, nothing has value unles it is given value

Oct 09, 2022 10:02 PM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Nick - this is a very timely article for me.  I am trying to figure this our for my home in St Lucie County in Florida.

Oct 10, 2022 07:44 AM
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Ed Silva that makes sense and seems a fair way to do it. I wish we had a standard format like that.

Emily Medvec it seems crazy that an important value is considered something that does not need to be disclosed. good that you are able to find it and share it with your buyers.

Laura Cerrano that is a good point, but appraisers are always looking backwards rather than to the value the market is giving something.

Grant Schneider I heard from the county appraiser today, and no doubt being new construction we will be appealing our assessed value.

Oct 10, 2022 10:28 AM