Seattle property tax assessments compared to corresponding market values

Property taxes are made up of your tax assessment plus other elements like voter-approved levies. However, the tax assessment portion has the biggest impact on your annual tax bill. The tax assessment is basically the taxman, i.e. the county's tax assessor, estimating the value of your home, and that number is then plugged into the formula that's used to set your property taxes for the year. 

The tax-assessed value of a home is determined by the county's Tax Assessor and is adjusted annually, usually in the upward direction. I have yet to meet a homeowner who adamantly states that their property taxes are too low and need to be increased immediately. Many homeowners believe that the assessed value of their home is too high. But in reality, is that actually the case? 

For this article, I looked at Seattle home sales and directly compared them to the corresponding tax-assessed valuation. This will give you an idea of how accurate assessed values are relative to the true market value of a home.

How is tax assessment determined for a home?

According to the Washington State Department of Revenue:  State law requires that assessors appraise property at 100% of its true and fair market value in money, according to the highest and best use of the property. Fair market value, or true value, is the amount of money that a willing and unobligated buyer is willing to pay a willing and unobligated seller.

The King County tax assessor uses one of the following to determine the assessed value of your home:

1. Compares your home to similar homes that have sold in your area. Basically, it's the same as a comparative market analysis that real estate agents use to set the list price for a home and for how much it might sell for.
2. The Cost Approach is based on the cost of replacing an existing home with a similar structure. This method is mostly used for setting the tax assessment for new construction homes.

Allegedly, the assessor is required to do a physical, in-person inspection of your property once every 6 years but I'm not sure if that actually happens. That's a lot of homes to go take a look at and I've ner seem one standing at my front door.

So, how does the tax-assessed value compare to the true market value?

I compared the sale price of some homes in the north Seattle area with their corresponding tax-assessed value. I looked at 50 home sales that closed in the month of June 2023. I recorded the sale price and the corresponding tax-assessed value. Note that the most recently listed online tax assessments were for the year 2022. All home sales data was taken from the Northwest MLS (NWMLS).

And this is how the two values compare:

As you can see, there is not a perfect one-to-one correlation between what the tax assessor thinks your home is worth and what it's worth if listed for sale. Yes, as the assessed value increases, the potential sale price also goes up but just as many homes sold above as below their tax assessments.

Basically, the tax-assessed value of your home is no better an estimate of your home's true value, i.e. market value, than many online automated home evaluation tools like the famously unreliable Zestimate. As ever, the true value of a home is how much it will sell for on the open market. The tax assessor's opinion is not perfect, just like many Realtor's market evaluations.

Looks like some owners are paying too much and some are paying too little property taxes?

Based on the above data, for the homes where the sale price was significantly above the tax-assessed value then those homeowners were probably paying less property tax than they should have been and for those sellers whose home sold for less than the tax value then maybe they were paying more taxes than they should have? As home owner, you have the right to contest and appeal your tax assessment. Here's a link for more information on that process.

However, this data is based on a single year's tax assessment (2022), and over a longer time span it's hard to tell whether the same home was consistently paying more or less than they should have been had their assessment been more accurate.

Note that some listing agents will state in the marketing material for a home that it's priced below the tax-assessed value but, as the data above show, this is meaningless because the assesed value is not a reliable indicator of true market value. 

The difference between appraised value, market value, and assessed value.

• The appraised value of a home is the value as determined by a professional property appraiser and is usually part of the home purchase process when a buyer is getting a loan to purchase a home or when a homeowner is refinancing their home loan.
• The market value of a home is what a home is worth if it is listed for sale on the open market and what it sells for.
• The tax assessment value is how much the County's tax assessor thinks your home is worth

To summarize regarding how the tax-assessed home values compare to their real value: the tax assessment is basically just an estimate and is not perfect now .  Some homeowners owners might be paying more taxes than they should and some might be paying less. Such is life I suppose!

This article was written by Seattle and Eastside Realtor Conor MacEvilly who has been in the business since 2008. I hope you enjoyed the post and thanks for visiting my website. If you have any questions about Puget Sounds area residential real estate feel free to contact me. I'm happy to help. My direct line (cell) is 206-349-8477.