One of the most common questions I receive from home buyers and sellers alike addresses the topic of tax value. Most will ask: “How does the tax value, as reported by the county government, affect the market value of this home/my home?” The answer isn’t always as simple as one might realize, but it doesn’t have to be a deal-breaker when deciding on which house to buy, or even if it’s the right time to put your house on the market. 

First, let’s dive in to what ‘Assessed Value’ represents. Assessed value can be referred to as the taxable, numerical value assigned to real property through a county-wide assessment. In Wake County, this assessment occurs on an quadrennial calendar (or at least once every 4 years beginning in March 2016) and includes data points including but not limited to past sale records, estimated replacement cost of the home, and the potential income or highest and best use of your property. The law requires this assessment to be a reflection of ‘fair market value’ if the home were to be sold on the open and competitive market, however these assessments don’t always include factors that can influence the actual selling price of a given property.

For a more detailed description of how tax values are assessed, visit: http://www.wakegov.com/tax/realestate/revaluation/Pages/default.aspx

Market, or Sales, Value can simply be described as the amount a buyer is willing to pay for a given property. In an open market, factors such as recent sales data, local market conditions, inventory, location, desirability of a neighborhood, school districts, features, land attributes, and cosmetic enhancements all contribute to a buyer’s perception of value and either confirm or create dissent in the buyer’s mind about the asking price of the property. Likewise, how unique a property may appear with respect to design, layout, and scarcity can heavily impact the overall value and final selling price of a home. These factors, along with several market conditions and data-specific factors, play a significant role in determining a property’s selling price potential, and can either support tax values as they are assessed or offer an alternative value that may or may not reflect the value assigned by the county government.

Overall, many home buyers and sellers tend to gravitate toward the government’s opinion of value of a given property when it comes time to buy or sell a home. The issue here is that while somewhat accurate at the time of assessment, these values do not normally follow market fluctuations at the same rate as would be expected when making a real estate decision. The market, as we all know, can change within a much shorter timespan than 4, 2, or even 1 years’ time. Furthermore, a tax assessment is essentially a value ‘snapshot’ of a generalized market at the time of assessment, rendering it essentially outdated the larger the timespan between assessment updates becomes.

Real estate is a hyper-local market that can change based on many factors not always considered during a tax evaluation. So, while your tax value may appear higher or lower than you were expecting, chances are your home’s unique selling value is somewhat different – either higher or lower – than the number you’re seeing today. To learn more about how much your property may be worth in this real estate market, send an email to steven@costellorei.com or visit http://stevensquires.costellorei.com/sellers/free-market-analysis/ for a free market analysis of your home. 

To check your home’s recently updated tax value, visit: http://services.wakegov.com/realestate/

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Steven D. Squires, Jr. is a Broker/REALTOR®, SPS® with Costello Real Estate & Investments, LLC. in Raleigh, NC.

Disclaimer: Steven Squires does not represent, nor work for, Wake County Government. Steven Squires is not a tax or finance professional, but is fully licensed in North Carolina to perform Broker Price Opinions for real estate clients and customers. For tax, accounting, and other financial advice, please consult a tax or accounting professional.

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.