My North Seattle Home

January 19, 2012

Are you paying too much property tax on your Ballard home?

• Posted by Conor
• 1 Comment

Because of the drop in home values since they peaked in 2007, many Seattle home owners are naturally wondering if they are now paying too  much in property taxes. With the exception of Warren Buffett, few of us think we are paying too little in taxes. I compared individual property taxes with the corresponding sale price of Ballard single family homes that sold over the last three months of 2011 in the 98117 zip code area.

Distressed properties (short sales and bank-owned) were excluded since in general they sell for less than market value. Regardless, they are a small percentage of the Ballard real estate market. Data was combined from the Northwest Multiple Listing Service (NWMLS) and Realist sites.

The sale price of a home is a true indication of what it is worth, it’s what a buyer is willing to pay for that home. When tax assessors do an evaluation of the value of your Ballard home, they will generate a Total Assessment value which means the value of the land plus any improvements (i.e. the house, garage, accessory dwelling units etc). You property taxes will be based on this assessment and other factors for your neighborhood.

I compared the total tax assessments and the sale prices for two different price ranges.

Ballard single family homes that sold for less than $300,000:

For single family homes that sold for less than $300,000, 10 of 12 homes sold for less than the total tax assessed value and some for substantially less. Some of these home owners could definitely contest the amount of property taxes they are paying on recently purchased homes. Probably the main reason for the majority of homes in this price range selling for less is that this segment of the Seattle real estate market has lost a greater amount of equity compared to higher priced homes.

Distressed properties are more concentrated in the lower price ranges because this is where many first time buyers bought into during the “golden days” with low to no downpayments and readjusting mortgages that unfortunately have now come back to bite them. Also properties are assessed for taxes a year in advance of being adjusted so this delay will have an impact as well. Finally, as with any home, the tax assessor doesn’t usually walk through a home and get to see all the improvement or deferred maintenance that buyers are privileged to.

Ballard single family homes that sold for between $400,000 and $500,000:

For the $400,000 to $500,000 price range there’s a completely different pattern from that seen for homes that sold for less than $300,000.  Of the homes that sold during the last 3 months of 2011, 19 of 24 homes sold for more than the total assessed value. So in this price range, the majority of home owners should be happy (as far as that is humanly possible) with their property taxes. I doubt too many of you would be rushing to pick up the phone to call the tax assessor to tell them you’re not paying enough property taxes!

If you want to contest your own property taxes, the first step is to have an evaluation of your home’s current market value performed by a Realtor so you know whether or not your home has been assessed too high. If the answer is “yes!” then click here for King County Assessor website and click on the Real Property Petition link at the top right for the required paperwork.

If you would like an evaluation of your home’s current market value please contact me and I’d be happy to do one for you!

Who dares wins!