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Ask Eli: Tax Assessment vs List Price — Who Is Right?

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: I am interested in making an offer on a home, but the asking price is nearly $80,000 higher than the county’s tax value. Will I be overpaying if I offer over the tax assessment? Can I use the tax assessment to negotiate a lower purchase price?

Answer: This is one of the most common questions I’m asked by clients early in the buying process. The fact is that the majority of homes are assessed below market value (sold price) and you should not rely on the county’s assessment to determine how much you’re willing to pay for a home.

Negotiate Away, But Don’t Expect Them To Listen

As for using it in negotiations, you should find any angle you can to negotiate a better deal for yourself so if pointing out the tax assessment helps you get a better deal, by all means go for it! However, don’t be surprised when the seller or the seller’s agent quickly dismiss it, especially if they’ve seen the data presented in this column (sorry).

2018 Tax Assessment vs 2018 Sold Prices

Let’s take a look at how Arlington county’s 2018 Tax Assessment Values compared to the actual purchase price of homes that sold in 2018. The table below is based on 689 of the ~3,000 total sales in Arlington from 2018.

For some reason, the MLS doesn’t have updated 2018 tax assessments for most of the transactions hence a limited data set, but 689 data points are plenty.

In 2018, homes in Arlington sold an average of 7.6% higher than their assessed value. By comparison, Zillow claims that their Zestimates have just a 3.3% margin of error in Arlington. Just 17.1% of homes sold for less than their 2018 tax assessment and only 8.3% sold for 5% or less than the assessed value.

Appealing Your Tax Assessment

If you’re an Arlington homeowner, you should be happy to hear that you’re most likely paying taxes (.996% rate) on a value that represents less than what your home is worth.

For those of you who are not happy with the assessed value of your home, every year you have an opportunity to appeal your assessment, but the burden of proof is on you, not the county, and it’s not easy even if you have solid data. Arlington provides an informative website on the appeal process.

Quick hits on that process:

  • Your first appeal with the Dept. of Real Estate Assessments must be filed by March 1 of that year.
  • Step 1: Call 703-228-3920 for information on how your assessment was determined.
  • Step 2: File your appeal online here (First Level).
  • Step 3: An assessor will visit your home and you can provide relevant info to make your case.
  • Step 4: If you’re not satisfied with the decision or have not received written notice by April 1, file your second appeal with the Board of Equalization online here (Second Level) by April 15.
  • Step 5: If you’re not satisfied with the decision, your final option for appeal is with the Circuit Court, which will likely require you to hire an attorney.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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