What Your Real Estate Clients Need to Know About Property Value and Taxes

Xpressdocs | March 27, 2017 | Content For Agents

By: This is a guest post from Mark Swindell – Senior Account Manager XpressDocs

Property value and property tax knowledge is important to everyone a real estate agent works with: buyers, sellers, investors, and even past clients. If you’re a knowledgeable real estate agent who helps clients grasp the complexity of these, there are great opportunities to gain valuable referrals.

Where do property values come from?
Property values are derived from several components.

First, a local tax assessor’s office considers the dollar value of both land and improvements and calculates this assessed value against the local tax rate to set each property’s tax bill. The tax assessor serves at the municipal or county level of government (states don’t control property tax rates and get little, if any, proceeds from property taxes). If you aren’t already aware of your local tax rate, call the assessor’s office to learn how much is charged per $100 of house, and make sure you understand the laws surrounding property tax increases in your area.

Assessed value, however, doesn’t have much relevance once the taxes are paid. What your clients think of as property value probably has more to do with appraised values and market values.

Appraised value is the result of a home appraisal conducted by a licensed appraiser. It’s an evaluation of the home and local market conditions that determines the market value of a house.

Market value is the price that will likely be paid for any given home in the current market, based on variables like amenities or supply and demand. Market value assumes that the home will sell before the market changes drastically.

To help determine market value, real estate agents compare the assessed values of two or more similar properties, or “comps.” To give your clients estimates that are more accurate than the ones they’re seeing through online property-listing sites, access tax records that display not only assessed values and past sales information, but also a value range.

What are property values doing in certain areas?
Overall, you may have noticed they’re going up. According to the National Association of Home Builders’ analysis of the Census Bureau’s quarterly tax data, property owners paid $22 billion in the first quarter of 2016 – up 4.4 percent over the previous four quarters, and the largest percentage increase since 2009. The quarter also marked the first time since 2010 that four-quarter property tax revenues grew faster than sales tax receipts. Since the rate has increased every quarter but one since 2014, and taxes are part of the concept of property value, it seems a safe bet that property values will hold steady or continue to rise.

If you haven’t already, make it a habit to track the current market trends in your area:

  • Where are the list prices accelerating faster, or where is the average selling price increasing?
  • Where do you see new roads and schools being built to accommodate an expected growth spurt, or new developments going in that will keep tax bases low?

For the clearest growth picture, visit your city or county offices and speak with the road and building departments for information on any major projects scheduled in your area. They can also tell you how to find out what developments the state is planning.

Can property values be adjusted?
Within limited parameters, property values go up or down depending on improvements to the property or area, the trends in the local market, and changes to the property tax rates. Know the schedule on which your local tax assessor does reassessments, which could mean a change in tax rates. Most properties are reassessed annually.

Once a home is purchased, property taxes can be amended by appeal of assessment or tax exemptions:

  • Tax rates are set by law, but assessments can be negotiated; local governments have procedures in place to appeal assessed values. Know the specifics of this process in your area.
  • Exemptions can affect owner-occupied properties, seniors, and low-income households among others. Learn more about the exemptions available in your area from the assessor’s office or department of revenue.

How can you help your audiences?
To start, proactively cover property values in your marketing materials:

  • Inform your newest homebuyers about how to decipher their tax bill, including information on when their taxes will be due, and alert them to any exemptions they may qualify for.
  • Let past clients know about any potential changes to their tax rates — including school-district tax levies — and alert them to the process to appeal property values.
  • Prepare explanatory information for potential buyers and sellers and make it available both online and in print.

When it comes to tracking and posting data-driven information on your listings, as well as planning targeted, automated marketing campaigns, simplify the process with help from a professional marketing firm. With many firms offering online resources and templates, you can feel at ease and build the pieces that help your clients make the most of their property goals and financial situations.

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