The house across the street from my house is up for sale. I’m reminded of that every time I leave my driveway and I am curious to see how long it will take to sell and at what price. I’m curious not because I’m going to sell my house any time soon, but just because, well, I’m curious. It’s a rare homeowner who doesn’t regularly wonder what their home is worth.
This time of year, homeowners receive their third quarter property tax bills which contain the “actual” assessed value of their homes. Homeowners are billed during the first six months of the municipal fiscal year (July 1st through December 31st) based on the previous fiscal year’s assessed value. So how accurate is that new value?
The “actual” assessed value received in January 2018 is based on the home’s value on January 1st 2017, using sales that have occurred during the year 2016. That assessed value will remain in the public domain for the next 12 months. Meaning that the assessed value of a home in Massachusetts in December of 2018, is based on sales occurring between 24 and 36 months in the past, almost guaranteeing that the “actual” assessed value is not the correct market value.
Submitting the assessed value of a home is a required field in the multiple listing service so there is no getting away from that number even if it varies significantly from the current list price. Individual assessed values enter the public domain as a public record published by every town as required by law.
Good luck getting a local assessor to change that value; it does happen, but rarely. Local assessors are required by state law to assess property at its “full and fair” value. If you have ever talked to an assessor about the process they use, you will come away believing that they have done just that. Of course, time-frame is everything. What assessors are actually trying to do is establish a value for your home relative to your neighbor’s home and every other home in town. Most towns revalue properties every year, though they are only required to do so every three years. Year three values must be reviewed and certified by the state.
There is a dilemma in the residential real estate business that agents often are confronted with: The highest value ever published is the correct value of a property. This is almost never accurate. In an active, appreciating market, this value may be low; more often third-party providers of estimates like Zillow, Realtor.com or Redfin using proprietary algorithms, compete to provide value estimates that regularly vary from each other by tens of thousands of dollars.
These third-party providers admit that their estimates are not capable of directly taking into consideration the aesthetics of a home or its precise location and the accuracy of their estimates are off by 4 or 5 percent at best, which is not insignificant.
The estimates given for my house varies by $119,000 from one of these sites to another. So, you know where this is going. Why rely on an algorithm or some form of artificial intelligence when you can have real time intellect and the practical experience of a Resident Expertsm?