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So, what’s my home really worth? | Guest column
By Gary Franklin
The terms appraised value and assessed value are frequently used interchangeably by home buyers and sellers, but the differences make for an apples and oranges type of comparison.
Appraisal: An appraisal value represents the fair market value of a house based on comparable sales, condition and location of the property, size and number of rooms and type of construction. Appraisals are generally done in connection with mortgage financing and the number used is a base to determine how much money to lend.
Banks and mortgage lenders don't want to loan out more than a property is worth. An appraiser looks inside the home and takes into account many interior (and exterior) improvements.
Assessment: An assessment, on the other hand, is the value of a house as determined by appraisers that work for the county tax assessor, using recent sales of comparable properties.
This type of appraisal is sometimes referred to as an “ad valorem” appraisal, and it is used to establish a value for calculating fair and equitable taxes between and among all properties in the county.
Ideally, the assessed value (for taxes) and the appraised value (for the mortgage loan) should be very close if the date of the appraisals are the same or close. Also, the assessor’ appraiser only goes inside the home if invited by the property owner, so recent improvements are sometimes not factored into the assessed value, especially if there was no permit issued for the improvements.
For the first time, this year, approximately 5/6ths of the assessments were done using a statistical analysis of sales in a general neighborhood to adjust the previous assessed values. Only the northern half of Lopez Island, along with Shaw, Decatur, Blakely and Center islands were physically inspected and appraised by the assessor’s appraisal staff.
Then a statistical valuation was used for all other properties in the county. Now that the county is adjusting values on an annual basis, the assessments should be more in tune with actual market values, but you should keep in mind the assessment date is the first of the year, so the assessment only reflects the market value on that date.
It should be noted, however, that a statistical adjustment to existing assessed value does not recognize changes to a property, such as deferred or exceptional maintenance, changes in view attributes over time, and to new construction that was accomplished without a building permit.
You can find a breakdown of our property taxes at, San Juan County Property Taxes, which are the lowest in the state.
Market Value: This is the other method used to value properties.
When an appraiser does her work for a lender, she will consider the recent sales of comparable properties. When a seller wants to sell or a buyer wants to buy, they should ask a professional realtor to develop a Comparative Market Analysis, or CMA. These calculations will compare properties that have actually sold in the marketplace.
This is probably the best valuation for an idea of what a property is worth in the local marketplace at a given point in time.
We have seen a doubling of the number of homes sold on San Juan Island in 2012 versus 2011, from 52 to 113 (Jan.- Dec. 4). The mean price (half sold above this price and half sold below this price) has risen from $451,000, in 2011, to $453,000, in 2012. So this past year, we've seen 57 sales priced below $453,000 and the same number sold above.
We didn't just see closing on foreclosures and short sales, but also on reasonably priced homes, in all price categories. If you would like specific numbers in the different price brackets, please let me know.
We feel that this is a "rocky bottom" in our market and we don't anticipate any large downward fluctuations in our market over the next year. Indeed, with falling inventory and more sales pending, we are hopeful to begin the new year with guarded optimism.
Happy Holidays — may you and your family attract health, wealth and happiness.
— Editor’s note: Gary Franklin managing partner at Windermere Real Estate, Friday Harbor