Real Estate has different types of values and none of them are equal.
*Taxable Value: In South Florida your taxable value is reset when you purchase a property. That is often why you have a different taxable value than your neighbors. Also, it is not like you see the county tax man knocking on doors to check out the interior of houses, to see what has or has not been upgraded. So many times, the values range among neighbors.
If it is your primary residence, you can file for Homestead Exemption (http://www.bcpa.net/homestead.asp) and get a savings on your tax bill. Even further, you have the Save Our Home Amendment where your home’s assessed value can’t go up more than 3% than last year. (http://www.bcpa.net/soh.asp)
So when you think about it, your taxable and assessed value are not your property’s true worth.
*Appraised Value: When you apply for a mortgage, the lender will send out an appraiser to get a value for that property so they can base their loan on. Appraisers need to use as many properties as they can that are as close to the subject property as possible. Unfortunately many times properties are not as similar as cars. If there are little to no properties that are similar to the property, the property will probably get undervalued (in the appraisal). Appraisers are limited to hard data and have little leeway for large adjustments. Plus, many times they can go back from six months to a year looking for closed sales. Usually a property is worth more a year later, but an appraiser might not factor that in.
I had a buyer looking on Hollywood Beach for a condo. The condo building (Hollywood Towers) had recently been renovated and few people knew how great a value the property had become. That also meant, the recent sales were when the building was dated, before the renovations. We looked from Fort Lauderdale to Hallandale Beach, from $400,000-$550,000 and felt that this building was the best value for that price range. We went to contract for $550,00 on a totally redone 2 bedroom 2 bath, and it under-appraised by $100,000. The appraiser felt the property was a beautiful property and probably was worth $550,000, there was just no similar sales that he could use to support that.
The buyer had looked at over 20 buildings and new this one was the best deal, regardless of appraisal. (It was surrounded by million dollar condos and had views of the beach, broadwalk and intracoastal.) Here is the view from the unit.
Within a month of closing, a 3 bedroom, 2 bath closed for $727,500. So our sale helped the values in the building come up.
*Market Value: When a listing agent meets with a potential listing to sell a property, they go through comparable data of recent sales and usually give them a price range where they feel it should be listed, as well as a price range where they expect it to sell in. Also, we pay attention to sales as they go higher and lower, giving a better indication of where the market value is going.
*Emotional Value: Regardless of any taxable value, appraised value or asking price, it really comes down to what the property is emotionally worth to you. There could be limited inventory for your needs, such as school district, pool homes in that price range, views, lot or yard size, location to work or family and so on. I always tell my buyers to put an offer in where they feel the price would be worth it for them, that if the property sold for any higher, they would be ok losing it. Too often buyers get caught up in appraisal and market value, forgetting that they need to heavily factor in what property is best for them and their needs. They may walk away from a property over a $5,000 discrepancy in appraised value only to spend more money on a house that did appraise, but didn’t meet all the needs that the previous house did.
I have been in residential real estate for over ten years and every buyer has a different path finding a home. Some can find a property in five showings while others can take thirty showings. Most of the time, it is the emotional value that wins out. They walk in and just know.