Ever Wondered Why Your Home's Assessed Value is so Off?

By William “Bill” Boswell

Bill is widely known as one of New Jersey’s most sought after real estate agents and is a sales associate of Keller Williams Prosperity Realty.

Do you think a home’s assessed value tells you how much it’s really worth? You’re not alone—but it’s a common misunderstanding. I’ve seen buyers, sellers, and even agents mistakenly treat assessed values like price tags. In New Jersey, that can lead to serious confusion.

Here’s the truth: assessed value is primarily used for property tax purposes, not to reflect current market conditions. In fact, from town to town, the relationship between assessed value and actual market value can vary wildly.

Still, many buyers worry they’re overpaying if they offer more than the assessed value. On the flip side, some sellers assume that number should dictate their asking price. But in most cases, it’s not a reliable benchmark—especially in a dynamic market.

If you’re wondering why assessed values seem so out of sync with sale prices, this is where the equalization ratio comes in. It’s not a pricing tool. It doesn’t tell you what a home is worth. But it does tell you how far off the town’s assessments might be from actual market values.

For example, if a town has an equalization ratio of 50% and a home is assessed at $500,000, the municipality is essentially estimating the market value to be closer to $1 million. That’s a huge difference—and it highlights how misleading an unadjusted assessed value can be.

Equalization ratios change as market conditions evolve. Right after a town conducts a full reassessment, the ratio is typically near 100%—meaning the assessed values are fairly close to market value. But as time passes and home prices rise, that ratio declines. The gap widens, even if the assessments don’t change. This system allows towns to keep tax structures relatively consistent without frequent reassessments.

The equalization ratio is not something to use when pricing your home to sell. It’s not a shortcut to market value. But it is something worth knowing—especially if you’re comparing properties across different towns, trying to understand why one home’s assessed value looks wildly off compared to another.

Instead of relying on assessed values or equalization ratios to price or evaluate a property, work with a knowledgeable real estate agent who understands true market data, buyer behavior, and local sales trends.

Because when it comes to pricing a home—or understanding what one is really worth—context is everything, and clarity always beats assumption.

If you have questions, just give me a call at 973-224-4605 or send an email to bill@northjerseyluxury.com. I’d be happy to help.