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Westchester Homes Should be Assessed at Full Market Value

Westchester Real Estate Broker Phil Faranda asks: Is it too much to ask that a home's assessed value reflect, you know, its value?

My home is assessed for $32,000.
Last week, we closed on a listing where the buyer paid $364,000. The home’s assessed value was $11,400.
I have a listing in Croton on the market for $599,000 with an assessed value of $10,350.

All over Westchester County, municipalities have their properties assessed at numbers reflective of market values from decades ago.
$50,000.
$113,000.
$9,500.
$25,100.

These numbers are often less than 1/20 the real value. It makes zero sense.

In order to translate that number to market value, you need a conversion formula or you have to call your assessor’s office.  The result is confusing for consumers and can be deceptive for homeowners who don’t know they are over assessed, sometimes grossly so. We often get calls from consumers who see the property taxes are $12,000 on a home but the “assessment” is $18,000. Which do they pay? What does the $18,000 mean? And we have to explain something to these folks that does not really help them get any closer to finding a home.

I am sure I’m not the only one whose time is wasted. I am sure staff at the assessor’s office have to translate these assessed values more times than they care to count.

The answer is simple. The towns and cities should assess homes at full market value and end the practice of using numbers that make no sense at best and, at worst, confuse or mislead. It all speaks to the inertia of the transparent government we deserve but do not get. People should not need a phone call or a scientific calculator to know what their assessed value is. There is nothing remotely forthright or transparent about a $500,000 house being assessed for $25,000.

Would converting to full market value assessment cost money and time? Yes, they say it would. Why? I don’t know. It seems to me that a college sophomore could create a computer program that would do the job in 3 hours. But a common sense solution like that has never taken hold.
You’d need a committee.
And a task force.
And commission.
And a study.
You’d have to open it up to bidders.

Why? The process has to be transparent.

The mind boggles.

 

For more real estate commentary, log onto Westchester Real Estate Blog, authored by J. Philip Faranda, broker and owner of J. Philip Real Estate

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Billy May 31, 2012 at 09:23 PM
Chris, all towns/cities have an equalization rate that allows you to calculate the current Fair Market Value from the assessment. Simply take the assessment value & divide it by the equalization rate.
Chris McHugh May 31, 2012 at 10:41 PM
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George Datino June 01, 2012 at 11:52 AM
If you want to get an idea about Full Market Value assessments, you should look at the Town of Rye, which went to Full Market Value assessments. There were positive and negative experiences and there are some "lessons learned" that can help others. One of the biggest surprises (at least to me and others I know) is that Full Market Value doesn't equate to what the selling price of a house is. I know a lot of people who have questioned their assessment and have been told that the value is based on some value of the property in the area based on size plus the value of the actual dwelling based on # rooms and square footage. I believe it is an attempt to equalize the value of houses based on the amount of property and # of people who can legally live there (since services are provided equally to the same # of people living across similar properties) and not based on the actual condition of the house (which would have an influence on the selling value of a house). For example, two exactly the same houses on quarter acre lots. One has been kept up, with fresh paint and the root in good shape, etc. etc. while the other is in disrepair. The selling price of the two homes would be different but as far as assessed value is concerned, they are the same. I know the value of homes come into play, but is more in coming up with average values that can be applied across all properties. I am not an expert but I know Full Market Value doesn't actually mean what most people assume it means.
J Philip Faranda June 01, 2012 at 12:41 PM
George- Thanks for the insight. I wrote not long ago that like an appraisal, assessed values are imperfect. The only 100% accurate determination of value is what a ready, willing and able buyer will pay for a property at a given time. I do think that consumers would be better served by full market assessments than the unrealistic factors we now have that require equalization rates and more homework. A perspective home buyer should not have to do extra work to translate, nor can they see the actual tax bill the owner gets to get answers.
George Datino June 01, 2012 at 01:06 PM
Yes, the actual value of a house is what a buyer is ready, willing, and able to buy it at. With that said, I do agree with Full Market Value assessment in which selling prices determine average value rates in calculating a property's Assessed Value and not that the selling price is the Assessed Value. There is a difference. Without trying to equalize like (similar) properties, one would unfairly would punish the homowner that keeps up the house and does not allow the house to fall into disrepair. Two houses on the same size lot, with the same number of rooms and square footage would use the same amount of services and should pay equally.

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