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Tax Assessment Versus Sales Price/Appraisal

Tax Assessment Versus Sales Price/Appraisal

I am considering buying a home. I looked at the tax assessment and it is a lot lower than the sales price.

  

The assessment is NOT the appraised value.  An appraisal will look specifically at one property and compare it to other VERY similar properties within a relatively SMALL geographic area ( a few blocks to a couple miles) that have sold very RECENTLY (last six months or so).  The assessment is used for tax purposes and is more of a birds eye view of a property that looks for somewhat similar properties in a wider area that have sold somewhat recently and is sometimes significantly different from the value assigned by an appraiser (and could be higher or lower). 

 

The tax assessment could be similar to the sales price or could be VERY different.

 

In Maryland, properties are assessed once every three years and the assigned value for tax purposes will step up over the next three years to the value assigned by the assessor. 

 

For example, a property was assessed for $393,000 as of 1/1/2015 and was previously assessed for $319,000.  Each year the assigned assessment will increase by 1/3 of the difference for tax purposes.  In Maryland, if a property is primary residence and a homestead tax application has been completed the increase in tax due is capped each year.  For a primary residence with the homestead exemption, the percentage the property tax can go up each year varies by county.  

 

Once the property sells to a new owner, the full assessed amount is used for property tax purposes.

Here’s info on Maryland assessments:

 

http://www.dat.state.md.us/sdatweb/hog.html

 

A real estate agent will run a comparative market analysis and tell you what properties that are similar to yours have sold for recently which should be reflective of what your property will appraise for, and therefore is a better estimate of sales price.

Warm Regards,

Bridget McGee  Maryland Mortgage Mama  NMLS# 196068  Corridor Mortgage Group.   410-960-2061 EHO   bmcgee@corridormtg.com or marylandmortgagemama@gmail.com

 

If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure! 

If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest.  Please contact me at 410-960-2061.

Comment balloon 6 commentsBridget "Mortgage Mama" McGee • February 05 2015 02:11PM

Comments

There is a big difference between assessed value for taxation purposes and market value for sales purposes.

 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) almost 4 years ago

Thank you Bridget! I can't count how many times I've heard "but the assessment is only X amount". Awesome explanation, I'll be reblogging this (if you enable the reblogging feature that is)!

Posted by Andrea Bedard, M.A.; REALTOR® Silver Spring, MD and beyond (Thompson Company, REALTORS®) almost 4 years ago

There is a lot of confusion about this. You did a great job of explaining the difference between an assessment and an appraisal.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) almost 4 years ago

I too grow weary of the endless supply of people including a few agents who feel that an assessment is some sort of indication of real value.

Posted by Bob Crane, Forestland Experts! 715-204-9671 (Woodland Management Service / Woodland Real Estate, Keller Williams fox cities) almost 4 years ago

Bridget, This topic comes up frequently if not daily. I am constantly explaining the difference to sellers, buyers and the listening radio audience.

Posted by Margaret Rome, Baltimore Maryland, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) almost 4 years ago

Bridget McGee This information came in handy this past week on my radio show. Had a caller ask about appraisal, assessments and the value on Z.

Posted by Margaret Rome, Baltimore Maryland, Sell Your Home With Margaret Rome ( HomeRome Realty 410-530-2400) almost 4 years ago

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