Why You Shouldn’t Use Your Tax Value to Determine Your Home’s List Price

Why You Shouldn’t Use Your Tax Value to Determine Your Home’s List Price

Many homeowners assume that their home’s tax-assessed value is a good indicator of what they can sell their home for—but that’s a costly misconception. In reality, tax values and market values are calculated differently and serve very different purposes. Here’s why you shouldn’t use your tax value to determine your list price and what you can do to keep your tax assessment as low as possible.

Tax Value vs. Market Value: What’s the Difference?

1. Purpose of the Value – The tax-assessed value is used by the county to determine your property taxes, while the market value is what buyers are actually willing to pay based on real-time market conditions.
2. How It’s Calculated – Tax assessments are often based on outdated mass appraisals, not on specific upgrades or recent comparable home sales. Market value, on the other hand, is determined by current supply and demand, recent sales, and your home’s specific condition and features.
3. Lagging Behind the Market – Tax values don’t always reflect the true worth of your home. In a rising market, they tend to be lower than actual market value, and in a declining market, they can be artificially high until the next assessment update.

Why You Shouldn’t Rely on Tax Value for Listing Your Home

• It Can Undervalue or Overvalue Your Home – If you list based on your tax value, you may leave money on the table or price yourself out of the market.
• Buyers Don’t Use Tax Values to Make Offers – Serious buyers and their agents look at comparable sales, home condition, and location—never tax assessments.
• Lenders Use Market Appraisals, Not Tax Values – When a buyer finances a home, their lender will require an independent appraisal that reflects market value, not tax value.
• Market Prices Can Sometimes Be Lower Than Tax Value – In some cases, tax values may remain high even when the real estate market slows down. If demand drops, interest rates rise, or economic conditions change, market prices can decline while tax assessments remain elevated due to delayed county updates. This is another reason why tax value isn’t a reliable pricing tool.

How to Keep Your Tax Value as Low as Possible

While you don’t want to use your tax value to price your home, you do want to keep it low to minimize your property taxes. Here are a few ways to do that:

✅ File a Homestead Exemption – If this is your primary residence, this exemption can limit how much your taxable value increases each year. ✅ Review Your Property Tax Assessment Annually – Counties don’t always get it right! Check your assessed value for errors, such as incorrect square footage or extra features you don’t have. ✅ Protest Your Assessment – If your assessed value seems too high compared to similar homes in your area, you can file a protest with your appraisal district. Providing recent comparable sales or evidence of needed repairs can help your case. ✅ Limit Permits for Unnecessary Work – Major renovations that require permits (like adding square footage) can increase your tax value, so weigh the tax impact before making big changes. ✅ Hire a Property Tax Consultant – If your assessment seems unfair, a professional can help you challenge it effectively.

Need a Market-Based Home Valuation?

If you’re thinking of selling, don’t rely on your tax assessment—let’s get a real, market-based valuation instead. I offer a free comparative market analysis (CMA) to help you determine the best list price based on current market conditions. Reach out today, and let’s make sure you price your home right!

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By understanding the difference between tax value and market value, you can make smarter real estate decisions—whether you’re planning to sell or just keeping an eye on your home’s financials.