John Morrison - Boston area real estate - Exclusive Buyer's Agent, CBR

If you are in the market for Massachusetts real estate, you will sooner or later come across the terms assessed value and appraised value. Is there a difference between an assessment and appraisal? If so, how will this difference affect you and your ability to purchase real estate?

Definition of assessed value: the worth or value of a piece of property as determined by the taxing authority for the purpose of levying an ad valorem (property) tax.

In Massachusetts, each town has a tax assessor, and this person is responsible for determing the value of each parcel of land and its improvements (typically houses). After the tax assessor determines the value, he/she passes this information along to the town for the purpose of levying the tax.

How is this value determined? In most cases, the assessed value is based on some percentage of market value. Typically the assessor, in conjunction with the town, will figure out what the tax base needs to be for a given year to meet budget requirements. They will then look at previous records and current market values and assign a value to each parcel of land. At times, assessed values will be almost 100% of market values, but typically they are a lower percentage. Assessed values of properties are public records, and can be found by visiting the tax assessor's office at your local Town Hall or by viewing local land records.

Definition of appraised value: an estimate of value based on an appraiser's analysis of data within the context of the appraisal problem that the appraiser was employed to solve. While this appears to be a mouthful (and it is), let's break it down so it is more understandable.

First, what is an appraiser? This person will be a qualified professional, typically licensed by the state in which they practice. A more experienced appraiser will be certified. Who do they work for? Appraisers work for appraisal companies, banks, real estate companies, and other lending institutions.

If you need a loan to purchase Massachusetts property, in most cases the entity you are borrowing from will hire an appraiser (at your expense, typically $250-$600) to provide an unbiased value of the subject property based on many factors. In almost all cases, the appraised value must be equal to or higher than the proposed purchase price. Basically, the bank will want to make sure they are making a solid loan and that you as the borrower will not be borrowing more than the property is worth at the time of purchase.

On what factors is an appraisal based? Major factors include current market values of similar homes in similar conditions in the same neighborhood as well as housing trends and demand for the subject area. Appraisers typically have access to census data that shows population trends by town or region. Additionally, an appraiser will take into account any additions that have been done (are they fitting with the style of house?) and other improvements to the property (curb appeal matters!). There are a few different types of appraisals, but the key is that the appraiser should be familiar with the area so he/she can provide an unbiased expert opinion of value which can be a benefit to sellers and buyers.

In the current Boston area real estate market, buyers are finding that houses can be bought for thousands of dollars below assessed value. If you have a question about assessed values or appraised values, do not hesitate to contact me to discuss your questions or concerns. Seeking answers from a qualified professional is never a bad way to go, and I guarantee to save you money when you buy a home in Massachusetts.

call 1.800.25.BUYER and ask for John

or

email me

The Federal Reserve announced today that over the next year (18 months at most), they will be buying up mortgage-backed securities to the tune of $500 billion.

This is what the Fed had to say in a statement, per a Bankrate.com article,

"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally."

What a nice Thanksgiving-week treat! Rates have immediately dropped today, and are likely to drop slightly over the next few weeks barring any unforeseen financial collapses or other major news. If you are currently in the market for a home loan, experts suggest you lock in your rate to take advantage of the recent drop. 30-year mortgage rates are back below 6%.

If you are interested in purchasing real estate in Massachusetts, feel free to contact me to discuss what this will mean for your prospects. While I am not in the mortgage industry, I can assist you in shopping for loans and finding an advantageous rate with few or no junk fees, and I know the questions to ask any potential lender.

call 800.25.BUYER (ask for John) or email me

It looks like MA voters will vote down a measure to repeal the state's income tax, which is currently 5.3%. About 99% of districts have reported, and the NOs are ahead 70%-30%. Who says the public doesn't have common sense?

Also, the measure to decriminalize possession of less than one ounce of marijuana will likely pass. 65% of voters feel that having some weed should be a civil offense rather than a criminal one.

As far as greyhound racing, 56% of voters want to outlaw this activity.

Holy liberal, Batman.

A needed step appears to be taking place in the Massachusetts housing market. The Massachusetts Association of Realtors® reported September 2008 market data recently, and the housing correction continues.

Feel free to read all about it over at Bay State Realtor News. Here is an excerpt:

“The inventory of residential properties on the market as of September 30, 2008 decreased 13.6 percent compared to the same time last year (from 53,957 listings in 2007 to 46,598 listings in 2008). At the current sales pace, this represents approximately 10.2 months of supply, a decrease from 12.0 months of supply in September 2007. On a month-to-month basis, the average months of supply is up from 8.1 months in August 2008. It is considered a balanced market when there are between 7.5 and 8.5 months of supply.”

What have we learned? Inventory must come down in order to have a normal housing market. Unfortunately, prices do not continually drop in a ‘normal’ market, so we are not quite there yet. Prices are down for single family homes and condominiums across the state over the past year (multiple years for many towns across the Commonwealth). Once prices start to stabilize, we should be nearing the other side of the current economic downturn.

If you plan to buy real estate in MA, you should consider doing it before the end of 2009. Your property’s value may decrease in the short-term (6 to 18 months) after you purchase, but if you stay in your home for at least five years, odds are high that you’ll make a buck or three upon the transference of your deed.

If you are in the market to purchase MA real estate, why not hire someone at no additional cost that only has your best interests in mind and never works for sellers? Call me: 1.800.25.BUYER (ask for John) or email me.

There will be three ballot questions facing voters this election cycle in my home state of MA. They are each important, but the one that will affect your money the most is question one.

What is question 1? Should MA eliminate personal income tax? Read more about this question on this page sponsored by the MA League of Women Voters.

Why should you vote no? Michael Widmer, president of the Massachusetts Taxpayer Foundation, wrote an interesting opinion piece for the Boston Globe recently. In his article, Widmer brings to light the most serious potential consequence voting yes likely will bring about: higher property tax.

Massachusetts, already facing a budget shortfall, will have to make up lost income tax revenue from another source if this question passes. Sales tax will likely rise as well. The low-to-middle income home owner will suffer, and, according to Widmer,

"would likely end up paying more in taxes, just out of a different pocket. Meanwhile, the wealthier who pay a higher share of income taxes would get a big tax break."

If you are undecided about how to vote, I encourage you to visit both pages linked to above.

There are two additonal questions on this year's ballot.

Question 2: Should MA decriminalize possession of an ounce or less of marijuana? If this passes, folks over age 18 who get caught with an ounce or less of pot will pay a $100 fine, and since the offense will be a civil one, nothing will go on their record. No public opining from me on this one...

Question 3: Should MA protect greyhounds by outlawing dog racing? This only applies to racing where money is wagered on the outcome, and I suppose there is no reason to race the pups unless people are betting on it. I've never been to Wonderland nor Raynham Parks, but I am a dog lover and have read about mistreatment of racing hounds, so I'll vote yes.