Definition: Assessed Value (AV) is a multi-faceted assessment of a home’s physical condition used by home sellers and mortgage lenders. It evaluates the likelihood that a borrower will repay the loan based on information currently available in the sales transaction and other information provided by government agencies. This information is used to help determine if the sale price will be sufficient to cover obligations on loan and maintain current equity in the property. The Assessed Value tool is part of the Property Assessment program, which provides quick, easy access to property information.
The assessed value is used to determine the value of a residence for tax and benefits purposes if the property has been losing value over time. Typical values are used to determine capital gains, tax exemptions, or capital losses (known as the basis). These values are used for formulating tax payment strategies and assessing the potential benefits of loan transactions.
Where property is sold, assessors will require a description of the property, including square footage, number of bedrooms, bathrooms, and whatever else is necessary to assess the value. The on-site value assessment will be combined with information from other sources such as photographs, videos, computers, or even just an episode of Hoarders if deemed relevant by the assessor.
An assessed value is always lower than the market value because it attempts to reflect the potential buyers’ economic interest in buying a particular property. It considers such factors as market demand for the property in the marketplace, interest rates paid for mortgages and other mortgage-related costs, historic appreciation in values for similar properties, maintenance needs and upkeep costs for unique improvements, and value-added by improvements made over the years.
Property owners who present construction documents or other information that may lead to an increase in their value may request that their property be re-assessed by the same government assessor who originally assessed them. If the property is re-assessed by the same government assessor, then the new value is used as the basis for calculating any subsequent increases in the property’s assessed value. The municipal assessor’s office is responsible for the valuation of property located in a specified tax district. The assessor collects taxes from property owners based on their assessed value, divides those taxes equally among those owners, and applies them to the payment of outstanding bills.
The assessed value is a property’s market value as determined by an appraisal conducted by an independent firm. The appraisal is based on the services and skills offered by the property, its condition, and how well it serves the buyer’s needs (revenue sources, maintenance needs, utilities, etc.). The higher the assessed value, the better the deal for the buyer. Generally, homes with higher assessed values sell faster than those with lower values, particularly when both are sold simultaneously. Of course, price is only one factor when selling a house.