Market Value is estimated by Real Estate Agents
In conducting the comparative market analysis of a home, I usually study over 20 properties of similar size, construction style and to the best of my ability, compare the premium features and amenities of each. These properties fall into three categories: ones that sold in the last 6 months, ones that are currently for sale, as well as ones that recently went under agreement.
Based on my inspection the property, a careful review of the recent sales and offerings, and given my knowledge of the local market, I then can estimate the present market value of a property and can suggest a list price.
For instance, I recently went on a listing presentation for a gorgeous, penthouse, 1 bedroom condominium on Appleton Street in the South End. Amenities included an oversized living room, deeded parking, air conditioning, and outdoor space.
All of these things were taken into consideration when helping my seller determine a fair market value.
Appraised Value is estimated by licensed Appraisers
The Appraised Value is the relative market value of a property as determined by a licensed real estate appraiser who will inspect the property for a bank / buyer before a loan is underwriten. The bank’s appraisers will often go inside to have a look and they find other units very similar in features on which they base their assessment of a property’s relative market value.
Assessed Value is estimated by the City for tax purposes
Boston uses the Market Approach to determine Assessed Value. Market sales of similar properties that sold in the year prior to January 1 are analyzed, compared and adjusted to forecast what the property would sell for on January 1st. Most residential property is valued by the market approach.
For instance, at Four Seasons Place, an ultra luxury condominium complex overlooking the Public Garden, when an upper floor unit with a great view of the Charles River and Beacon Hill sells, often the City will use that sales price as a way of estimating the vale of all of the units in the stack that have the same floor plan. Obviously, this is a VERY inexact science as the City assessors do not know what the view is like, or even the quality of the renovations.
This assessed figure is used by the City of Boston for tax purposes and of the three, it is the least accurate indication of the actual Value of a property. If you feel their number is way off, the City of Boston has instructions online on how to apply for a real estate tax abatement.
