Sellers often bring me their SDAT assessment as a starting point for what the house is worth. Sometimes it’s close. Often it’s well off in one direction or the other. The assessment is built for property taxes, not for pricing a sale, and it works differently from the way buyers and appraisers figure value.
I’m Evan Weissman. I buy houses across Maryland, and I explain this gap to sellers almost every week. Here’s how the State Department of Assessments and Taxation sets values and why the sale price can come out differently.
How SDAT values a house
SDAT values every property in the state for tax purposes. According to SDAT’s assessment appeal page, owners normally get a Notice of Assessment every three years, showing the old market value and the new one. The new value reflects market conditions, additions or changes to the structures, and other factors affecting the property since the last assessment.
Assessors value thousands of properties at a time using sales data and property records. They usually don’t walk through your house.
Three reasons the numbers drift apart
Timing. Your assessment was set at your last reassessment and may be up to three years old. Markets can move a lot in that time.
Phase-ins. When a reassessment raises the value, the increase is phased in equally over three years. Decreases take effect right away. So the assessment used on a given tax bill can be lower than SDAT’s own full estimate.
What they can’t see. SDAT works from records. It may not know about a worn-out kitchen, a failing roof, foundation cracks, or water in the basement. It also may not know about an unpermitted finished basement or a remodel. Condition is one of the biggest drivers of what a buyer will pay, and the assessment mostly can’t capture it.
The tax bill number is not the assessment
The figure on your tax bill can differ from the SDAT market value for another reason: the homestead credit. If the house has been your principal residence, the taxable assessment may be capped well below the full assessment. My article on the homestead tax credit when you sell explains that.
How buyers and appraisers set value
Buyers and appraisers look at recent sales of similar houses nearby, adjusted for size, condition, lot, and features. A lender’s appraiser walks through the house. A cash buyer like me estimates what the house would be worth after repairs and subtracts the repair cost, holding costs, and a margin. My article on how cash home buyers calculate offers shows that math.
None of those methods start with the SDAT assessment, although some people use it as a rough check.
When the assessment runs high
If your assessment is higher than what similar houses are selling for, you’re paying more tax than you should. You can appeal within 45 days of the notice date. In the two years between reassessments, SDAT lets you file a petition for review by the first working day after January 1. A recent appraisal, comparable sales, and photos of condition problems help.
A high assessment doesn’t mean buyers will pay that much. If a house needs work, the sale price can come in well below the assessment.
When the assessment runs low
A low assessment is common in fast-rising markets and on well-updated houses. It doesn’t mean your house is worth only that much, and it shouldn’t anchor your price. It does mean the buyer’s future tax bills may rise when SDAT reassesses.
A note for buyers who purchase mid-year
SDAT also allows a new owner who takes title between January 1 and June 30 to appeal within 60 days of the transfer. That doesn’t affect you as a seller, but a buyer may mention it if the assessment is out of line.
Reading your SDAT record
SDAT’s real property search shows more than one number. You’ll usually see separate land and improvement values, the base value from the prior cycle, the new value, and phase-in assessments for each year of the cycle. It also shows the homestead application status and the last recorded transfer, including the price when there was one.
That last part is useful. If the house sold recently, the deed price is often a better starting point than the assessment, adjusted for any work done since.
Estates and the assessment
When a house goes through an estate, the personal representative lists its value on the estate inventory filed with the Register of Wills. Many personal representatives get an appraisal as of the date of death instead of relying on the assessment, because it’s a more accurate figure and it also helps document the heirs’ tax basis. My article on the Maryland Register of Wills covers the estate side.
Getting a real number
If you want to know what your house would sell for, you need comparable sales and an honest look at condition. An agent can prepare a market analysis, an appraiser can give a formal opinion, and I can give you a cash offer with the math laid out. Comparing them is often useful. My article on what your house is worth as a cash offer explains the difference.
Is SDAT assessed value the same as market value?
No. The assessment is a mass-appraisal estimate for taxes, set every three years and phased in, and it rarely reflects condition. Market value comes from what buyers will actually pay.
How often does SDAT reassess Maryland homes?
Owners normally receive a new Notice of Assessment every three years.
Can I appeal my SDAT assessment?
Yes. File within 45 days of the notice date, or file a petition for review in the years between reassessments.
Why is my house assessed higher than it would sell for?
Often because SDAT doesn’t know about condition problems, or because the market has softened since the last reassessment.
Talk through your situation
If you’d like a real-world number to compare with your assessment, call or text me at (410) 498-7473. I’ll show you how I got to it.