Assessment versus the list price. Because I am finding that Buyers are placing such importance on this, I think it should be talked about. Here is my take on this for the town of Chatham.
As everything in real estate, the assessment vs sale price varies per town. Most of the time it seems like there is no rhyme or reason to setting the assessed value, either. In Chatham, tax assessors often don’t even get inside many homes because the owners are only here part time. So the assessors sit in their car parked in the driveway or walk around the house taking notes and trying to figure out what they can without actually SEEING the house. They don’t know the kitchen and baths have been updated, the basement finished, a new room over the garage added, and there were two bathrooms added! They SHOULD know this (in cases where a building permit would have been taken out) but sometimes these improvements are missed. As a result, the living space square footage is not correct and the assessment is going to be much lower than it would be/should be. That’s great – you pay lower taxes, and all Sellers love that! Until they go to sell. Then they want their assessment to be as high as possible, because they know that Buyers pay attention to it.
A huge factor in figuring the assessments is the LOCATION. Waterfront and water view is always assessed higher, that goes without saying. And, certain neighborhoods are just more valuable than others. The Town even has a rating system of neighborhoods, a big map showing how Chatham is broken up into different neighborhoods each numbered as to their value. (Don’t look at this map if you are going to be shattered to find out you don’t live in the top rated neighborhood like you thought!) As for what homes sell for versus the assessment, here is what I have found in my experience.
If a home is new construction, or walk to the beach, or walk to Town, it sells over assessment. If a home is new construction or renovated PLUS in a walk to Town or beach location, you’ve hit the jackpot! That usually will sell significantly over. It’s supply and demand, and most Buyers are looking for these types of homes, and new or renovated at that. Waterfront and water view houses also sell over the assessment, oftentimes WAY over. On the contrary though, a home with water views or frontage but located on a very busy road (Route 28 for example), will probably go UNDER assessment. The negative of the busy road may outweigh the water views or the new construction aspect.
Properties that are not located in investment-type areas (near beach or Town, waterfront water view) have been selling in Chatham just over the assessment UNLESS they need major renovation. If they need major renovation or A LOT of cosmetic updates – e.g., every bathroom and the kitchen needs to be gutted, there are harvest gold rugs throughout the house, and wallpaper from the 1970’s – this house will sell under the assessment unless it’s on the water! One more exception here. Waterfront is king; even tear-downs sell higher than the assessed value.
Further on the sale price versus assessment, there is also the ‘days on market’ to factor in. If a listing has lingered on the market for a long time, Buyers think something is wrong with it as it gets bounced around from one realtor to the next. Ultimately when this house finally does sell, it is under the assessed value. Even if it is new or renovated or in a great location. That’s another reason you don’t want to overprice new listings!
Last, it comes down to supply and demand. Many Chatham Buyers are looking for a rental investment property. If a lot of Buyers are looking for a walk to beach or Town location and there is a limited supply, they are going to pay well over the assessed value. That’s just the way it goes. These are the most desirable locations and there are not many homes for sale in these areas. So there is less room for negotiation on the price for Buyers.
If you’re looking for a good Chatham value, your benchmark cannot be getting a home under the assessment. According to the Warren Group, at the height of the market in 2006 the median single family home in Chatham sold for $690,000. In 2014 the median sale price was $585,000. So you can rest assured that you are definitely NOT buying at the height of the market. Even if you pay over the assessed value.