Assessed Tax Values in Birmingham

As realtors, we typically look at assessed tax values when representing a buyer or seller as another piece of information to serve our clients' best interest. We know that doing a Comparative Market Analysis (CMA) for a potential seller has little to do with an assessed tax value, but we still look at it to corroborate our conclusion on what the list price should be or what a buyer wants to offer. I've often wondered how close the assessed tax values track sales over time so I decided to look for myself.

I decided that a reasonable approach would be to look at sales over the past six months (May 1, 2009 - October 31, 2009) and compare individual property sales prices to the assessed tax values for 2009. Here is what I found for two counties in Birmingham.

Jefferson County

% of homes that sold above the assessed tax value: 29.75%

% of homes that sold below the assessed tax value: 70.25%

Aggregate % sales price to assessed tax value: 88.65%

Shelby County

% of homes that sold above the assessed tax value: 42.76%

% of homes that sold below the assessed tax value: 57.24%

Aggregate % sales price to assessed tax value: 90.26%

While there are some differences between these two major Birmingham counties, it is interesting to note that they are both reasonably accurate in assessing values for the most part. In Jefferson County, however, homes are more than than 2 to 1 more likely to sell at an amount below their tax value than above. In both cases, in the aggregate, homes are generally selling for around 90% of their assessed tax value.

For a buyer and buyer agent, what this means is that you should ask why a property is significantly above the assessed tax value before making an offer. There are certainly plenty of cases where this may be appropriate and a thorough CMA can easily point this out. For a seller and a seller's agent, you should discuss the CMA in detail in light of a desire to price the home above the assessed tax value. For someone not involved in the purchase or sale of real estate, given the above facts, you may want to consider challenging your assessed tax value to save on the amount of property taxes you are currently obligated to pay when you get your notice from the county. You might be successful and save yourself some money! If, for example you own a home in the $300,000 price range, if you can get the valuation down 10%, you could save $300-$400 per year!

Wondering what you home might be worth? Go to free market snapshot to get a comprehensive free report emailed directly to you detailing listings and recent sales in your area. In summary, while assessed tax values are not absolute and don't absolve agents of their duty to perform detailed CMAs to best serve their clients, whatever the situation. But they are a pretty decent measure to look at when making your final analysis!