Assessed Value vs. Fair Market Value

I am approached many times by buyers who use the tax assessment as the value they believe a home is worth to tender an offer on a home or a home seller who tries to use tax assessment as a sale price for their home.    To put it quite simply assessed value has nothing to do with the fair market value of a home (or what a home should sell for).

Definition of Assessed Value

The dollar value of a piece of property assigned by a public tax assessor for the purposes of taxation.
It’s that simple.  Assessed values are a tool to help meet a towns budget.  If the town budget goes up so will your tax rate.  If market values go down so will your assessed value but your tax rate will go up to meet the towns budget.   While in Massachusetts assessment is at 100% of assessed value, it does not mean that is what the house is worth in the open market marketplace or if you place your home for sale.

Definition of Fair Market Value

The price agreed upon and in which the money and property exchange hands between a home buyer and home seller.  Fair Market Value is a price in which the general buying public would be willing to pay. Both buyer and seller must be willing and informed to buy/sell the piece of real estate in a arms length transaction. A transaction where neither party is desperate to sell or buy and where the property is given reasonable exposure to the open market.

Fair Market Value is best determined by an appraisal or a comparative market analysis.  An appraisal or comparative market analysis is a best guess of what a home will sell for, but fair market value is not truly established until a buyer and seller come together and the transaction is completed.

You will find assessed value to be somewhat of a lagging indicator of value.  When real estate prices are rising assessed value will generally be lower than fair market value.  When real estate prices are declining you will find assessed values will generally  be higher than fair market value.   But as a whole, assessed value is in no means a way to determine the fair market value of the property.

Below is a graph of the last 30 days of single family home sales in Tewksbury Massachusetts.  Out of 19 homes that sold the average of the sale price to assessed value was 97.36%.  A low was a sale price 53% below assessed value value and a high of 140% of assessed value.

Street Sale Price Assessed Value Sale Price as a percent of Assessed Value
Newton Avenue $198,900.00 $229,900.00 86.52%
South St $135,000.00 $254,700.00 53.00%
Jodi Dr $350,000.00 $381,500.00 91.74%
Emily Rd $397,000.00 $369,900.00 107.33%
Heather Row $335,000.00 $433,800.00 77.22%
Darby St $180,000.00 $250,300.00 71.91%
Andover St $287,000.00 $318,800.00 90.03%
Maplewood Rd $390,000.00 $348,100.00 112.04%
Veranda Ave $230,000.00 $262,000.00 87.79%
South St $278,000.00 $252,000.00 110.32%
Chandler St $312,500.00 $252,400.00 123.81%
independence Ave $286,000.00 $239,800.00 119.27%
Laurie Dr $202,000.00 $254,200.00 79.46%
Homestead Ln $435,000.00 $451,600.00 96.32%
Pomfret Rd $334,500.00 $337,900.00 98.99%
Wells Drive $549,900.00 $569,900.00 96.49%
Salem Rd $260,000.00 $254,200.00 102.28%
Pocahontas Rd. $378,000.00 $268,200.00 140.94%
River Rd $275,000.00 $263,600.00 104.32%


Isn’t it funny that home owners want their fair market value to be as high as possible but there assessed value to be as low as possible?

Assessed Value vs. Fair Market Value- Tying it together

As a whole, you can see that assessed value can be very inaccurate to determines a homes value in the open real estate market.  The best way to find a Massachusetts House Values is to have and appraisal by a licensed appraiser or a comparative market analysis done a local real estate agent.


This post, Assessed Value vs. Fair Market Value, was provided by Kevin Vitali of EXIT Group One Real Estate.  If you need help buying or selling a home in Essex County or Northern Middlesex County call Kevin at 978-360-042.

Wondering, “what is my home worth?” Get your homes value by ordering your free comparative market analysis.

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