Boston Sales Prices Versus Assessed Values
David Bates / July 25, 2011-1:50 pm
In the sale of 29 Brimmer #3, Beacon Hill, assessors got it almost exactly right. The sales price was only $100 under the assessed value, an accuracy measured at 99.99 percent. However, value bull’s-eyes by assessors are rare. A survey of 351 Boston condominiums sales in the first half of the year ($525K-$12.2 million) shows that about 20 percent of the time, the assessors got it kind of right — their assessment of value was within 5 percent of the condominium’s sale price. But the median difference between sales price and assessed value — a positive 13 percent — shows that assessors tend to be more wrong than right about market value. As well, considering the fact that 35 percent of condos in the survey sold for more than 20 percent higher than the assessed value, you might say that a large percentage of the time, the assessed value didn’t even hit the side of the market value barn.
All sorts of items account for the differences between assessed value and sales price. Yet perhaps the keenest insight can be gleaned by looking at the properties that had the biggest gaps. The condominium at 187 Warren #1 had a sale price nearly double its assessed value ($667K to$341K). Why so high? Cedric Adams, the listing broker, said the property was “stunning” on the inside and the owners had “impeccable taste.” On the opposite end of the spectrum, 186 Beacon #3 only sold for 77 percent of its assessed value. Why so low? According to the listing broker, the unit needed a tremendous amount of work. It just goes to show: You can’t judge the accuracy of an assessed value by its façade and location. It’s what’s on the inside that counts!
Using knowledge of the median differential, one clever buying strategy may be to make the seller an offer of 110 percent of the assessed value. What might seem like a magnanimous offer on the surface more often than not would be a comparative savings of 3 percent or greater for the buyer.