By Melanie Robitaille Sr. Staff Writer & Graphic Designer
Across North America every town relies upon a government property taxation system based on assessed property values, but what happens when these prices are misrepresentative of the actual market?
Sales Representative, Ricky Coté of EXIT Realty Associates in Dieppe, NB admits the taxation system is understandably needed, but because of its lag in his market, property values often end up off trends. Sellers in Ricky’s area have seen a drastic uptick in property assessment values, some without having made any upgrades whatsoever. He explained this causes two major issues: increased property taxes and false resale values saying, “The assessment can be misleading when a house in a neighborhood has been neglected but its assessed value reflects the price of well-maintained houses that were recently sold in the same neighborhood. The seller will obviously think that their house is worth more than its actual value. We also see underassessed properties in remote areas where very few houses have sold in the recent year. This creates a problem for the buyer of one of these properties who wants to pay the assessed value.”
Becca Jones, Associate Broker with EXIT Realty Advantage in Los Alamos, NM sees these same inconsistencies in her locale where the county relies solely on the process of sales ratio studies to assess properties. By averaging the price per square foot of homes sold in her market, adjusting for the number of bedrooms and bathrooms, homeowners receive what’s labeled as a fair market value (FMV) on their annual Notice of Valuation statement.
“Many buyers and sellers assume the fair market value shared on their assessment, from a county source, reflects what the home is worth today, but that’s rarely the case,” Becca said, “As REALTORS® we know that it’s only one piece of a comparative market analysis (CMA). Often this assessment will overstate the value of a home or in many cases lag behind actual market value,” she said, and it’s a perspective she recently expressed to her local media, because these inconsistencies have become such a problem in today’s shifting market.
“In our area currently, the FMV listed on these assessments have averaged 1-3% higher than what the home would list for. Some investors may use it as a very rough reference, but experienced buyers know they need more detailed comparables to make smart decisions,” she said.
It’s not unusual to come across customers and clients who are unaware of what’s happening in the current housing market. This is where Ricky says an agent should be a leader in educating the public and clients explaining, “A real estate professional should be the main source of information and should be on top of the latest news, trends and market conditions that influence the market.”
Becca does this by utilizing tools like weekly market updates, Net-Out Sheets, and open house feedback reports to keep her sellers informed. But ingenuity at the office level is bringing agents together in best pricing practices.
“We host Broker Price Opinion tours of upcoming listings,” she shared. “We’re all experts, and getting opinions on price from five-to-six brokers helps me and my sellers feel more confident about where we’re pricing their home. Other brokers help reinforce pricing discussions and make us collaborative for the good of the seller.”
So how do Ricky and Becca ensure a property is priced right? Read the full story in the latest edition of the EXIT Achiever magazine today.
