Automated Home Valuation (AVM) and what it can do for your Tax Assessment
Your property value determines how much you pay in real estate taxes. A bad assessment could cost you hundreds, or in extreme cases, thousands of dollars a year. Good thing you can contest your property's assessment and possibly get some money back in your pocket.
How to find out how much your home is worth
An Automated Valuation Model (AVM) is a tool that generates a rough estimate of your home's value based on tax records and other comparative factors. You can request a valuation of your property by entering your address and email into a valuation request form:
Some AVMs are free to use and available to the public. A more detailed report might cost somewhere around $20. Each model is different, so if you're not happy with the first valuation, it's not a bad idea to get a second opinion. Keep in mind, an AVM is a rough estimate based on publically available data.
If you're serious about contesting your property taxes, you will need more than just an automated report to plead your case. Professional consulting firms are available to help, but it might cost you some time and money. However, if you feel your taxes were wrongfully calculated, it might be worth digging a little deeper.
How it impacts your property taxes
Tax Assesors in your local Treasury use what is called "fair market value" to determine the value of real estate in their area. They use a similar process to AVMs by evaluating similar properties that recently sold in the area, and compare them to the tax records for your property.
Assessments are somewhat subjective because they're an estimate based on many factors. While a lot of Treasury departments have automated methods, there is a human element to determining property value. So, it is possible to argue that an assessment is inaccurate. Particularly, homeowners tend to contest their assessment when the estimate seems too high. If your property is valued at a higher price, you'll owe more in property tax.
If you're looking to sell your home, it's exciting to get a high valuation. However, if you don't plan to sell and get a surprising valuation, it might be worth looking at other options.
Resources to contest your tax assessment
Contesting your property assessment is a commitment, but it could be useful if you want to save some cash. Certain companies like Admiral Consulting help you contest your assessment for a percentage of what you save over a few years. Depending on how much you believe the assessment is wrong, it may be worth your time to talk to someone about your options.
Some customers are seeing up to a 10% spike in their real estate taxes from last year. $3,450 is the median property tax amount in Missouri for a home that's valued at $250,000. An assessment that is off by 10% would add almost $400 to your tax bill. Even for a modestly-priced home, it's worth speaking to someone about contesting your property tax.
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