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Just Market Value versus Actual Market Value--Understanding the Difference

Posted by Robert Casella on Saturday, March 9th, 2013 at 10:30am.

One of the toughest things I encounter in real estate is trying to dispel the assumption that "just market value" (as determined by the local taxing authority) for real property is always the same as actual market value. In theory, this assumption should hold true. However, let me use an example to demonstrate how a county's "just market value" can differ from actual market value.

Let's say the county appraises a property on January 1, 2013 at $200,000. For argument's sake, a private appraiser comes in that same exact day and affirms that the home is valued at $200,000. Over the next 10 months, the owner of the property puts in a new pool and adds a home addition (at an approximate value of $70,000). At the same time, home values based on recent sales have gone up $15,000 over the same 10 months. The private appraiser comes back to the house. Using the sales comparison appraisal methodology, he takes into consideration the pool, the addition, and higher home values based on recent sales. The home appraises at $285,000*.

A job relocation forces the homeowner to put the home back on the market and he lists the home at $285,000. BUYER Frank loves the home but is concerned that he is overpaying because the "just market value" shows that the home is only worth $200,000. REALTOR Carol advises BUYER Frank that because the county appraisal was promulgated on January 1st, 2013, it does not reflect the pool, the addition, and higher home values based on recent sales. Relieved, BUYER Frank puts in an offer and buys the home.

This example serves as just one illustration as to why the county appraisal, which serves as the basis for the "just market value" for tax purposes, is not always a reliable indicator of actual market value. It should also be noted that the county only conducts a "drive-by" appraisal (and is only required to conduct an appraisal once every 5 years!). However, private appraisers working for buyers or lenders actually conduct a physical inspection. Therefore, upgrades not accounted for by the tax assessor can cause the true market value of a home to exceed  its tax assessed value.

KEY TAKEWAY: The just market value as assigned by the county taxing authorities is not always a reliable indicator of actual market value. Consider hiring a realtor (ahem...I think I know someone) to help guide you!

* Note: Appraisers will not ordinarily give you the full value of the actual cost for improvements to a home.

--Robert Casella

 

 

 

DESTINATION REALTY GROUP
Robert Casella, CLHMS - Licensed Realtor
Certified Luxury Home Specialist
www.golakewoodranch.com
941.961.4037
robert@lwrhome.com

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