Your property tax bill is quickly becoming one of the biggest factors in the successful sale of your home. Simply put, exorbitant, unchecked real estate tax bills are undermining the value of real estate in our area.

With rising mortgage interest rates, limited deductibility of property taxes at the Federal level, and a simple unwillingness to take on the obligation of ever rising property taxes, buyers are thinking long and hard about this type of purchase.

Today’s buyer has started to focus more and more on the monthly cost of ownership. With higher interest rates and larger property tax bills, the affordability factor is squeezing homeowners right where it hurts, their equity. When initially speaking with a buyer entering the housing market, the conversation may not be about the price of the home they would like to consider, but a monthly payment amount they are comfortable paying or can qualify for. Even lender mortgage pre-approvals are calculating estimated property tax bills into their qualifying estimates. If the property tax bill is outside standard parameters, the buyer’s purchasing power is diminished.

As an example, a home for sale with a property tax bill over 2.5% of the asking price will have a hard time finding a buyer. To further exacerbate the issue, as the asking price drops, the property tax bill becomes even more disproportionate.

Why do some homes seem to have relatively low tax bills, when others seem to be disproportionately high? It is often a combination of several issues. The property’s assessed value on which the property taxes are based has been set too high by the county assessors office. Many owners choose not to protest the assessed values set by the county assessors office. This leads to artificially high assessed valuations. It can also be that an owner is unaware of certain exemptions for which they are eligible, and never applied for them.

Protesting your property taxes is generally financially painless, but is necessary if you would like to sell your home for a fair market value when the time comes. We have started working with homeowners to help evaluate their property tax bills in relation to competing properties in their area. This is something that should be done well in advance of entering the market. The process can take years to correct. Buyers will not accept the fact that the property is over-assessed and could be lowered. They only see the obligation as it exists today. Understanding the property tax system is confusing at best, for buyers, sellers and frankly, many real estate agents. 

We are happy to help with evaluating your property taxes and getting you pointed in the right direction. It’s something that can be very expensive if ignored.

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.