If you’re planning to sell your home, you may wonder how much your property is truly worth. Because there are multiple ways that a house is valued, the answer isn’t as simple as it might seem. Should you pay closer attention to your home’s assessed value versus its fair market value, or vice versa? What do these terms mean exactly? We’ve got the answers. Read on for the basics of assessed home value vs. market value, how these values are calculated, and the importance of each one.
Market Value vs. Property Tax Assessed Value: An Overview
The ‘fair market value’ is how much your home would sell for in a normal market and under ideal circumstances, with both the buyer and seller being under no compulsion to act and in full knowledge of the property’s condition.
The ‘tax assessed value’ is your home’s value as decided by county tax assessors. The assessment value is used to set the taxes on the property. If the home is assessed at a low value, then the taxes will be lower, and likewise for a high assessment. This value is important not only for the current homeowners who pay the taxes on the property, but for future buyers and lenders who might offer a loan on the property. Buyers should keep in mind that the property taxes will be an annual cost on top of whatever they pay for the property.
Is assessed value close to market value?
The assessed value of a home is usually less than market value, with the assessed value coming to 70-80% of market value. However, in recent years, Buncombe County has been working hard to assess properties at closer to the true market value. Of course, the market value can change before the next tax value assessment, creating a gap between market value and assessed value.
Two homes in Laurel Ridge, a mountainside development about 10 minutes from downtown Black Mountain.
The Basics of Assessed Value
To set the property tax rate on a home, a government assessor will determine the assessed value based on one of the following metrics: the cost to rebuild the home (factoring in current labor and material costs); the income that one could generate by leveraging the home; or a comparison to similar properties in the area. Recent renovations will often boost a home’s assessed value.
A baseline assessment is often produced by an automated computer program, after which the assessor adjusts the value as necessary, using their expertise and knowledge of any renovations that have been done to the home.
An assessor takes into account any major renovations done to the home, with kitchen and bathroom renovations typically increasing the home’s value most.
What if my home’s assessed value is higher than market value?
Sometimes a home’s value will be assessed higher than fair market value, and this means higher taxes on the home. In this case, homeowners are allowed to appeal the county’s decision. County property reappraisals are conducted every few years, with specific cycles dependent on the county in question. The process varies state to state, but in North Carolina, those seeking to appeal can do so during the year of the appraisal or in any year of the reappraisal cycle.
According to the North Carolina Department of Revenue, the first step is to contact the tax office and try to resolve the differences informally. If you have legitimate reason to believe your house was overvalued, this is a good place to start, as it avoids the formal appeal process. If the county won’t reevaluate the tax assessment, you can then file a formal appeal and appear before the Board of Equalization and Review to present reasons why the valuation should be changed. For more information from the NC Department of Revenue, click here.
Though all these residences are located in Biltmore Park, each is distinct and could value quite differently from one another, varying from a craftsman style home to condos above retail space.
The Basics of Fair Market Value
Fair market value (FMV) is the price that the home would sell for in an open, competitive market. In a way, the FMV is determined by using a hypothetical situation. In this scenario, both the buyer and seller are under no pressure (either from time or finances) to make a decision, both are fully aware of the house’s pros and cons, market conditions are normal, and both parties are acting of their own accord. In other words, it is an valuation of the house’s worth without any undue situational influences.
While the FMV may be the most accurate representation of a home’s worth, the home may end up being sold for more or less, depending on external factors. Life is complicated, and sellers often don’t have the luxury of waiting for the perfect offer to be placed on their home. Likewise, sometimes buyers have to move quickly due to a new job opportunity, medical issue, or family emergency. Due to situations like these, buyers might pay more, or sellers might accept less, than they would in ideal circumstances.
Freestone Properties provides current real estate updates by geographic area, including Asheville, Black Mountain, and Candler.
The Housing Market in Asheville, North Carolina
If you’re selling your home in Asheville, North Carolina, you will want to keep an eye on the housing market and comparable properties that are up for sale. This can help you determine your home’s FMV. Check out our latest real estate update for more statistics on the Asheville area housing market. You can also search by geographic area.
How to Determine Your Home’s Fair Market Value
There are a few ways to calculate the FMV of your home, including the following:
- For a quick and easy number, use online real estate sites to see the estimated value of your home and others in your neighborhood, as well as what houses nearby are selling for on average. Zillow or Trulia will have info on home values in your area. Keep in mind that these sites have limited quantitative data on your home. Read more about accuracy from websites like Zillow.
- Get your home appraised. An appraiser will assess your home inside and out to determine its market value. This can be helpful with determining FMV, especially if you have made changes to your home and want to know its updated value.
- Contact a realtor and ask them to run a comparable market analysis (CMA). This report will show homes in the area with similar features to yours, as well as their values. This can give you a good idea of the value of your own home.
Selling a Home in Asheville, NC
If you are interested in buying or selling a home in Asheville, NC, let us know. Our team of experts is ready to help you as you navigate the real estate market in Western North Carolina. Check our real estate market updates for Asheville and Black Mountain here, along with tons of other resources to help you as you sell or buy a house in the mountains.