City Assessment, Zestimate, and Appraisals - Virginia Beach Neighborhoods

There is a catch 22 when it comes to calculating the market value of your home. You need the market value to price it right before you sell it, but you can’t find the true market value until it sells. At the end of the day, you peer into your crystal ball in an attempt to see what the future buyer actually paid. The following discusses the pros and cons of the different crystal balls.

City Assessments

The city assessment is not an appraisal. It is not indicative of the market value of your home. The city simply assigns a value to your home for the purposes of taxing it. In theory it should be the exact market value of your home. But it is not.

Two years ago I refinanced my home and the appraisal was $100,000 above the assessment. We kept it as a rental and moved into a new home that appraised $100,000 below the city assessment. That’s one man on one day who saw the city assessment swing wildly in both directions from the appraisal. It is not uncommon for the assessment to be off by 20-30% in either direction.

Appraisals

Appraisals are like black magic. You can make them work for you in good ways and bad ways. We all want an appraisal to be an exact science. After all, the appraiser issues a very official looking report complete with a spreadsheet full of very precise numbers. Clearly these numbers are the result of accurate measuring, right? Sometimes, I suppose. But sometimes I look at an appraisal and wonder if the appraiser is brand new and this was his first job in Virginia Beach.

Getting an appraisal for a refinance is another beast entirely. In today’s market they come in too high. Don’t confuse your refinance appraisal with market value because it is not.

Zestimates

If you don’t have the Zillow app for your phone, get it. It’s great fun and it is an easy way to find out the asking price of the home you just drove by. The “zestimate” is Zillows best guess at the market value of every home. It is based on some proprietary algorithm that takes into account city assessment, structure, lot size, and nearby recently sold homes.

The zestimate is an entertainment tool and notoriously inaccurate. You can set it up to email you the monthly change in the “value” of your home. Some months I find my home worth $30,000 more than the previous month and I cheer and celebrate with my friends at the neighborhood pool. Other months I find myself $30,000 on the unlucky side and look for ways to increase my zestimate, like building a deck.

Have fun with the zestimate, but don’t take the number to the bank.

Comparable Market Analysis

The CMA is probably the most accurate estimate available for the market value of your home. But like an appraisal, it is only as good as the agent doing the analysis. Experience has a lot to do with accuracy. A combination of research, computer savvy, market knowledge, and good old fashioned common sense paves the way to a surprisingly accurate best guess at a home’s sale price. When I do a CMA, it does not always marry up with the assessments and the zestimates, but it is almost always right.

The CMA is the best way to ensure you do not overpay for a home. It is also the best way to get the market value of your home if you are thinking about selling it. Best of all, it is free.

Call me today if you need a realistic market value number to help you make the decision on whether to sell your home.