Seemingly intertwined with pricing real estate, the issue of assessment really stands apart from the entire buying and selling process. A mathematical formula devised for use in broad geographic areas, assessing standards vary from community to community and follow no uniform schedule for updating. Thus, while the assessed value of property is certainly a reliable indicator of what real estate taxes will be, it is not a good benchmark for determining current market value.
Although assessments are based on such criteria as the cost of similar properties, they can’t possibly take into account other factors which influence market valuation. For instance, larger may not signify more valuable, and assessment is based on size. A small, charming half cape home that’s an absolute gem could have a market value higher than an unattractive, poorly designed house three times larger.
Moreover, assessment does not account for condition. A lovely, perfectly maintained and manicured property might have the same assessed value as one in ill repair with front yard eyesores in the form of unregistered vehicles and “junk yard specials.”
With respect to land, consider that two one-acre lots, side by side and equal in size, one a kettle hole and virtually unbuildable, and one with ideal topography could share the same assessment figures. Nor does the assessed value reflect that only one of the sites might enjoy a beautiful water view.
Without doubt, prospective buyers and sellers should be cognizant of a property’s assessment. As a means of appraisal for valuation, however, it’s important to keep in mind that assessed value essentially takes a back seat to real estate’s pricing barometer, market value: what a willing buyer will pay a willing seller.