Houses are valued for different purposes.
Many home buyers in Snohomish County become confused when they see several different values on one home. Much of this confusion can be cleared up if you have a Realtor that can educate clients on the differences in these values. Homes are valued for different purposes and often times these values can be drastically different from the fair market value.
What is Fair Market Value?
Fair market value is the amount of money that a knowledgeable and willing buyer will offer to a knowledgeable and willing seller who will accept it when neither party is pressured to do so. Fair market value is influenced by number of bedrooms, updated kitchens and bathrooms, type of heating, curb appeal, architectural style, lot size and landscaping. It fluctuates according to its geographical location and changes according to its demand in the prevalent real estate market.
There are some extenuating circumstances in which properties are not sold for the fair market value. For example, someone is selling a home in a divorce or another circumstance where the home needs to be sold as quickly as possible. Sometimes selling becomes constrained by time and an owner may discount the sale price in order to get the home sold quicker.
A distressed property will usually not sell for full fair market value either. A distressed property could include foreclosures in close proximity to the home, a waste dump nearby, flood zones, or other similar types of issues that could cause buyers to look elsewhere for homes.
What is Assessed Value?
Some home buyers who see a home listed higher than the assessed value and have not been informed properly by their buyers agent, will use this data point as part of their negotiations when submitting an offer. The argument a buyer makes is that their offer is a certain dollar value because of what the assessed value happens to be.
The assessed value is only meant for tax purposes and does not take into account bedrooms, updated kitchens and bathrooms, curb appeal, architectural style, lot size, landscaping, location, etc. All of these aspects have a HUGE impact on the sale of a home.
You also need to remember that the assessed value of a home often lags the market because the valuations are not re-calculated until the beginning of the next calendar year. So if the market value of local properties are declining, it is not unusual to see the assessed value being higher.