Get ready for real estate assessments in Albemarle County

Whoo-boy. Get ready folks for a whole flurry of news, blog posts, media coverage and general griping and hallelujah-ing, depending on the perspective.

I just got off the phone with the Albemarle County Assessor’s office; two properties’ assessed values in the the same subdivision in Albemarle dropped by approximately 9% and 10%, respectively. The ramifications will be far-reaching, from homeowner’s pockets to the County’s coffers.

The land values stayed the same; the drop in assessed values came from the improvements (the houses themselves).
One argument could be that the new assessments are more in line with where the true market value should have been for the past several years. Another is that they are still high. Yet another (and the one I have made and will continue to make) is that real estate assessments with regards to market value – are irrelevant.

Market value is the price that a ready, willing and able buyer will pay, and a seller will accept.

The website will be updated at the end of the month.

*Here’s my offer to property owners of Albemarle. If you feel that your assessed value is wrong, and you intend to challenge your real estate assessment, contact me and we’ll set up a meeting to discuss your options. As far as challenging your assessment, you’re on your own; but I will help you arm yourself with the right information.

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  1. Anonymous Coward January 14, 2008 at 14:54

    Hello Jim. A question about the role that assessments play in real estate transactions — is it true that lenders will the the amount they are willing to lend tightly to the most recent assessment? If so, then I think I see a potentially significant market effect of falling assessments. I.e., they take away re-financing options for at least some of the large number of folks who are in ARMS that are re-setting over the next 9 mos (we have a big wave of re-sets due this summer). Banks that might have been willing to write a fixed rate re-finance at assessment X (which fell within the bank’s loan-to-value guidelines) won’t be willing to write the same loan at assessment 0.9X, which is where some people will be. And that unwillingness could, in turn, contribute to more foreclosures, which puts more houses on the market, which further depresses demand, which reduces assessments, etc. etc. — you see the picture.

  2. Matt Hodges January 14, 2008 at 16:10

    AC: In your mind differentiate the assessment from the fair market value of an appraisal. The assessment is done by the County/City and the appraisal is done for the benefit of the lender by a for-profit company. The appraisal should better represent what you could expect to sell your home for, should you wish to. Further, in the Central Virginia area, there are no “declining” markets. The closest declining market is Spotsylvania County. This means that the market is flat to up in value. That being said, just like there is no national temperature for the US, all houses in Central Virginia are not flat to increasing in value. Every house, depending on the condition, location and demand (and a whole mess of other market conditions) will sell at the correct price or appraise for the value you need to refi. We are fortunate to be in a market that has very favorable stabilizing influences, like UVA, NGIC and other major employers. As our employment base grows, so will the economic prosperity in our area. If you or any local resident is concerned about getting out of their ARM, contact a local loan officer about their options.

  3. Anonymous Coward January 14, 2008 at 22:47

    Hello Mr. Hodges. What you say helps me sort this through — so the bank works off the appraisal, rather than the assessment. Do I understand you to say that these two estimates of value are done according to different criteria? Is the government’s assessment not a take on fair market value?

    Thanks. AC

  4. Jim Duncan January 14, 2008 at 23:00

    AC –

    I see there as being three different valuations –

    1) Appraisal done by the bank to determine their risk level and what they are willing to lend. Appraisals are also looking, to a greater degree, at the (immediate) past.
    2) Assessment that is, by code, supposed to be 100% of market value – this is, and has been, with regards to true market value, irrelevant, as it is not a up-to-date as a market analysis reflecting currentmarket value, as they are done once yearly. Up until last year, they were done, in Albemarle, every two years. Nelson does them every five, I believe.
    3) Market value – as determined by a ready, willing and able buyer and seller having a “meeting of the minds.”

    Government’s assessment is a take on fair market value, but is less accurate, in my opinion, as it is subjected to less critical analysis and not subject to the open market.

  5. Anonymous Coward January 14, 2008 at 23:20

    Jim — that’s helpful . . . thanks.

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