Every odd year in Colorado, an assessor for the state assesses the value of homes to determine taxes due on your home.* Last year, our assessed value was about $5,000 less than the amount we paid for our house earlier that year. Not a fun little bit of information to get in the mail! Does this mean that our home had lost value over the last year, or, possibly, that the assessed value is a little bit inaccurate?
One of our exclusive buyer’s agent studied data from Louisville in the last year to find out. He compared sale price to assessed value since July 1 of last year to uncover what relationship, if any exists between these values.
It turns out, the assessed value is actually less than the sales value most of the time.
The data also shows that there is also very little relationship between the two values. In other words, the data suggests that the assessed value is somewhat random.
For most of the homes in the study, the assessed value was within -15% to +5% of the sales value. (The assessed value was 15% less than the actual value, up to 5% more than the actual value.)
This is one reason that our experienced exclusive buyers agents do not place much weight on the assessed value of a home in determining its current market value.
What is a better way to determine current market value?
Instead, our buyer agent went through an in depth evaluation of comparable homes (similar and recent home sales in our neighborhood) to determine the current market value. He adjusted the price based on specifics of our home compared to other home (for example, if there was a difference in flooring materials, or upgrades that our house had that the comparable home did not and vice versa.)
*For more information on how home values are assessed by the state, visit http://jeffco.us/assessor/assessor_T80_R10.htm.