Do Property Tax Assessments Effect What Home Buyers Expect To Pay?

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You’ve received your property tax assessment.  Hopefully you took my advice and decided to appeal it.   You’ll have to pay the tax man regardless… but one important question remains:  Do property tax assessments effect what home buyers expect to pay for a home?

The short answer – if you don’t feel like spending the next 90 seconds reading an insightful treatise on the subject – is no.

Without getting into too much detail, assessments done by the county are far less detail oriented than appraisals undertaken at the behest of a mortgage lender.  Assessors only crunch very general and somewhat dated data about a home – which often times leads them to an grossly incorrect opinion of value.   And you know what they say about opinions and… well, you know what they say.

Take Zillow’s Zestimate, one of the most popular opinions of real estate value.  Google any address, and sooner or later you’ll end up on Zillow. Once on Zillow, you’ll see the “”Zestimate”” for the property.  What is a Zestimate, you ask?  Zillow answers (I’ve bolded, for emphasis, my personal favorites):

The Zestimate (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user submitted data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account.  We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:

    * Getting a Comparative Market Analysis (CMA) from a real estate agent

    * Getting an appraisal from a professional appraiser

    * Visiting the house (whenever possible)

We have no idea what Zillow’s “”proprietary formula”” is- it’s sort of like the Colonel’s Secret Formula.  What we do know is that it’s calculated by a computer that’s never actually seen your home nor has it spent any time chatting with someone whose career is focused on local real estate values.  Yet many home buyers still feel compelled to look at the Zestimate.  And the tax assessment.

In reality, current market conditions trump false expectations and opinions in rather short order.  I’ve seen $400,000 homes with $300,000 tax assessments, and I’ve also seen $300,000 with $400,000 tax assessments.  While one home might come with an initially lower tax responsibility, both are subject to the dynamics of their local housing markets.  What have recently sold comparable homes sold for?  What are the other comparable options currently available on the market?  How many months of housing supply are there in this particular sub-market?  These are the questions that matter.

So, while I can’t promise you that a potential home buyer isn’t peeking at your tax assessment – or your home’s Zestimate – I’m confident that neither will impact what your home actually sells for.  This is probably not a shocker to those of you who feel that you’ve been “”over-assessed”” and  hopefully  this provides a little bit of comfort to those who have been “”under-assessed””.  If you’re looking for an expert opinion on what your home is worth, skip the tax man and the proprietary formula: consult a local housing market expert (aka your local Realtor).

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Jon Effron is widely regarded as one of the leading Realtors in Atlanta, working with both buyers and sellers throughout the metro area to maximize their real estate investments. In 2014, Jon was the #1 individual agent at Keller Williams Intown, one of the largest brokerages in Intown Atlanta. Prior to becoming a Realtor, Jon was the Vice President of Development at Tujay Group, an Atlanta real estate development firm. His career pre-real estate included stints at, eGroups (now Yahoo! Groups) and Elite Traveler magazine, where he served as the Vice President of Marketing.