Comparing Home Assessed Value Vs Market Value

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Comparing Home Assessed Value Vs Market Value

Do you know the market value of your home? What about its assessed value? Home prices are evaluated using these two systems and depending on where you look, they may be wildly unrelated numbers. Understanding your home’s market value is important to understanding your net worth and how much you could make if you sold your home. Understanding your home’s assessed value is an important part in figuring out how much property tax you must pay annually.

What’s in it for you

  1. Explaining assessed value of houses
  2. Explaining your home’s market value
  3. Ways homeowners can calculate a property’s market value

What a home’s assessed value means

A home’s assessed value is the dollar value of a house that is used by county tax assessors to figure out how much your home is worth for purposes of paying property taxes. Tax assessors calculate assessed property value based on various factors like home size, age, condition, and location.

In some counties, tax assessors inspect your house personally to determine its assessed value, while other times, home assessors complete home valuations using online software. Once a home’s assessed value has been determined, homeowners must account for their home’s tax assessment rate which is the sum of the tax rates of all taxing authorities in which a home is found. These regularly include entities like the county, city, and school district and can include other taxing entities like HOAs, special improvement districts, and local colleges.

Once a home’s assessed value has been decided, homeowners can estimate their property tax bill according to the formula below:

Property Tax Owed = (Assessed Value / 100) x Assessment Rate

For example, if your home has an assessed value of $200,000 and its total property tax assessment rate is $2.25, homeowners will owe $4,500 in annual property taxes. Typically, assessed home value is lower than market home value and doesn’t represent how much a property could sell for on the open market. During a real estate downturn, however, the assessed value is often higher than a house’s market value because of the time lag of property tax assessments.

What a home’s market value means

Market value of a home is the price used by lenders, buyers, and sellers to estimate the proper selling price of a home given current market conditions. An easy way to think about a home’s market value is: what would a buyer be willing to pay for a house or what would a seller be willing to sell a home for?

While assessed value is calculated annually, a home’s market value can fluctuate throughout the year and even from month to month. When the housing market is hot and demand for homes is high, home prices will increase as buyers are willing to pay more due to competition. Conversely, if the demand for homes in a certain area is low, then the market value of homes will decrease.

A fluctuating housing market isn’t the only factor that contributes to a property’s market value. The condition of a home, its features, and other buying trends will determine just how high a home’s market value can go.

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How to figure out my home’s market value

Knowing how to figure out a home’s market value can better prepare you to buy, sell, refinance, tap into your home’s equity, or even negotiate lower property taxes. Home value estimators can be found for free with online tools like the Federal Housing Finance Agency's House Price Calculator, but these are unlikely to be as accurate as an appraiser or comparable sales report (request your free comps report today!). Here are 2 ways to find a home’s market value, the first option has a price, the second option is free:

1. Hire a professional appraiser
If you’ve bought or sold a house before, you probably already know the process of hiring a professional home appraiser. They offer the most accurate home value estimates and account for unique and specific home characteristics such as size, age, condition, and location to determine its market value. The cost to have a professional home appraisal completed will range from $450-$750.

2. Ask for a free comparative market analysis
Homeowners who contact Good Vibes Homebuyers will receive a comparative market analysis for free. Our home valuation process is better than any other because we live in central Texas neighborhoods just like yours and we rely on information you tell us, not on computerized algorithms.

FAQ’s – Comparing Home Assessed Value Vs Market Value 

1. Where can I find information on my home’s tax rate?
Each year, the Texas Comptroller’s website posts a list of tax rates that cities, counties, and special districts report.

2. How much higher is a home’s market value than its assessed value?
The assessed value of a house is often less and is commonly 70-90% of the home’s market value.

3. What tax exemptions can I get to lower my home’s property taxes?
Residence Homestead. Ownership and use of property as a person’s primary residence in Texas will typically be eligible for property tax reductions.

Inherited Residence Homestead. The heir to a home or property who claims residency of the inherited house may be eligible for an exemption.

Age 65 or Older or Disabled Persons. If you’re older than 65 or are disabled, you may be eligible for an exemption.

Disabled Veterans. If you’re a disabled veteran, you may be entitled to a receive an extra property tax exemption.

What is my home’s market value?

Don’t get lost comparing apples to oranges. No single home valuation method is 100-percent right. That’s why using a combination of resources can give home sellers a more informed perspective of what their home is worth. Ultimately, the most reliable home value estimates come from professionals like GVH who take the time to carefully assess and value your property based on its unique characteristics. A better value of your home means more instant money in your pocket, so contact our real estate professionals Phil and Will to get a free home value report today!

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