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My county's property records often indicate a "market value" along with tax assessments. This is typically lower than the listing price of property, and I'm wondering how to interpret it.

For example, I saw one home listed on Zillow at 450k. The property record gives a "2023 Market Value" as 280k, and even specifies 40k land + 240k improvements.

Having viewed the home, I indeed think that the fair price for it would be no more than 300-350k, even accounting for the recent market events. Coincidentally, the seller has listed the property at almost exactly the same price as Zillow's Zestimate. The Zestimate has recently jumped up in price, although the last time it was 280k was early 2021.

The county's website states that the "market value" is based on recent sales of similar properties. Digging a bit deeper, they mention using a Computer Assissted Mass Appraisal (CAMA) program. I have never seen this CAMA, but this sounds like a reasonable and objective way to figure out the actual fair market values of houses.

Based on this, it seems like the county's "market value" is a good indicator of true value. Therefore if the listing price is much higher and the seller is unwilling to negotiate, it is probably unwise to actually purchase that property. Of course, most listings are significantly higher than the government's value, but one would expect that the properties listed for a good price sell quickly while those with inflated asks linger.


There is a similar question, but its answer https://money.stackexchange.com/a/52557/122663 does not apply to my case:

  • I am asking about the market value, not assessed value. For reference, the assessed value for this house is 27k, so it is clearly unrelated to value.
  • The county updates market values every year. It does not reassess "every three years (Maryland)".
  • The county clearly states that they base the market value on similar sales and they do not mention anything about capping the increases.
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    Suggestion: Call the county clerk's office and ask them to explain what this number means. They probably have the answer; at worst they will know who reports it and be able to tell you who to ask.
    – keshlam
    Apr 22, 2023 at 15:07
  • @keshlam Why would I call the clerk for this? They already explain what the number means on their website and I noted it in the question. Besides, I'm not asking what the government claims about their assessment. I'm asking if it's a good indicator of how much the house is actually worth. Apr 27, 2023 at 5:35
  • I don't think it is. Town assessment is a very shallow look at overall condition combined with size and a few other numbers to try to guess which recent sales were comparable. It should be in the general ballpark... unless your town skews the numbers for tax purposes, or there is something more, or less, attractive about your place than the assumed comparables. The market may be different than it was for the comparables, they may have been lucky it unlucky in finding the right buyer... The value is what that particular customer is willing to pay and you are willing to accept.
    – keshlam
    Apr 27, 2023 at 7:00
  • Note that price is also affected by how long you can afford to wait for a better bid. Sometimes closing the deal sooner is worth a considerable amount.
    – keshlam
    Apr 27, 2023 at 7:01
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    I strongly suspect this is true in some places but not others.... and actual sale price varies much more widely and rapidly than assessment does, in my experience.
    – keshlam
    Apr 27, 2023 at 7:17

1 Answer 1

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They're useful, depending on what use you have. The county values are the ones used to calculate the property taxes.

The county assessors usually use automated calculations - i.e.: they don't actually go to each property and evaluate it like mortgage appraisals do, they use statistics about the area and the information about the property listed in the county database (which may not be up to date if there were some changes or improvements done without permits, or cosmetic repairs make it look much better than other similar houses). Amount and frequency of transactions in your area can affect this as well (too few and far apart make it much less precise than frequent transactions with clustered valuations per property type).

A couple of more things may significantly affect the values (although you mentioned these don't apply to you).

  • They may be skewed depending on how the county assessments work. For example, in California the county assessors can only raise the assessed value 2% a year, no matter what the market does. So you may end up with properties valued at millions of dollars on the market, but valued at thousands of dollars by the county and taxed accordingly. This is the result of the California Proposition 13 from the seventies. Other areas may have different rules which may similarly affect how the county assessors operate.
  • Another thing to remember is that county assessors may not reassess every year. In some areas reassessments are done every several years and may lag behind the market quite significantly (in either direction, but people would usually appeal much faster if the market goes down). You're saying that that's not the case in your specific county.

Similarly Zestimate is some automated statistical calculation that doesn't take the specifics of the house into the account. But that is even less precise because it purely relies on data aggregation, and may be potentially manipulated by the owners and real estate agents (using phantom MLS listings or self-reporting data to Zillow).

In the end, in a sale transaction the value is what the seller is willing to accept and the buyer is willing to pay.


One thing I didn't mention, until you pressed a bit more in the comments: staleness of the data.

Zestimate is fed constantly and may change on a daily basis (and some less ethical agents are using that to try and manipulate it similarly to SEO).

County records are updated at best annually, and usually the valuation is set about half a year before it comes into effect for the actual tax assessment. So your county data is much more stale, even if it is much more precise when calculated compared to Zestimate. In a real estate market, information about transactions from 1.5-2 years ago reflected in the current valuation for property taxes may not be very relevant to an actual current sale transaction. The market may have moved since, and by a lot, in either direction.

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  • +1. Any assessment, even one where they crawl through the whole house in detail, is at best a ballpark guess. What you can actually get for it depends on your patience, the mood of the economy, how much it looks like the potential buyer's dream home, what your neighborhood is like (on many axes), and (as far as I can tell) whether Saturn is in the house of Jupiter and plans to stay for dinner.
    – keshlam
    Apr 23, 2023 at 0:25
  • There's some interesting information in this question, but I don't get the point. So is the government assessment a good indicator of fair market value, or not? If I go around offering sellers to buy their house at "market value", will I eventually close a fairly-priced sale, or will this be a hopeful exercise of low-balling? Apr 27, 2023 at 5:33
  • I'm confused here. It feels like you're talking about a completely different pair of Q-A. What are you talking about with spam offers? I'm saying the house is listed as for sale and obviously the seller is expecting offers. If you're talking about "luck" and saying the seller would be "dumb" to accept an offer at the county-reported market value, does that mean you think the market value is generally an unrealistically low valuation? We seem to be have a radically different understanding of how price discovery works in free markets. Incidentally, I'm asking about a free market, not California. Apr 27, 2023 at 6:27
  • And why would the seller contest it? This is just a market value, not the tax assessment value. Apr 27, 2023 at 6:28
  • @gomennathan sorry, I misunderstood you. I'll delete that comment. So you're asking if the seller listed the price at 450K would it make sense to offer 280K? You'll probably want to discuss it with your agent who'd know the market in your area much better. I'd say if the house was just listed, it is unlikely that the seller would accept an offer ~40% below asking. But if it was sitting there for a year - what's the worst that can happen?
    – littleadv
    Apr 27, 2023 at 6:30

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