The Bates Formula for Predicting Super High Assessed Values in Any Town
David Bates / February 2, 2012-12:22 pm
In a continuous effort to peel back the underpinnings of real estate value, I wondered if I could predict which homes in a town would be assessed by the governing authority to have the highest values in that town. I contacted the assessors of a number of towns and was impressed by their professionalism and knowledge. After speaking with them, I came to what may be considered a common sense approach to establishing the highest assessment values, which is that in the eyes of the governing authority, homes in the best locations with the largest amount of living space on the biggest lots in the very best condition are worth the most. How does the “Bates Formula for Predicting Super High Assessments” play out? Let’s take a look at the six highest-assessed homes in my home city of Newton to get a feel for its validity.
Best Locations (“BL”): Each year, Chestnut Hill and West Newton Hill fight it out to be the neighborhood with the highest median sales price in Newton. All six of the city’s highest-assessed homes were located in these two neighborhoods.
Largest Lots (“LL”): An MLS public record search found only 33 homes in Newton situated on lots in excess of 1.87 acres in size. All six of the highest-assessed homes in Newton have lots in excess of 1.87 acres.
Biggest Homes (“BH”): In a list of more than 16,000 Newton single families, I found only six that had more than 10,000 square feet of living space. Three of the highest-assessed homes had at least 10,000 square feet of living space and the other three had between 9,000 and 10,000 square feet.
Best Condition (“BC”): All six of the highest-assessed homes in Newton had significant renovations and additions. On more than one occasion, buyers purchased very valuable homes in very good condition only to knock those homes down and build even larger homes in incredible condition.
Simply put, The Bates Formula for Super High Assessments (BL + LL + BH + BC = Highest Assessed Value) might not be the E=MC2 of real estate values, but it’s a perspective we can take from Newton to predict the highest-assessed homes in a number of other Massachusetts communities.