Is the Tax appraisal what a home is worth??

Question

My girlfriend is looking at a home.
she is IN LOVE with it (me too ,')
however they are asking 10k more than the tax appraisal
is that what the bank appraisal would come back as? and therefore leave her/us with 10 to pay out of pocket?
please explain.....
thank you

Answer 1

The Tax assessment is just what the county assessor thinks the property is worth. It can be based on comparable homes in the area or the price paid for the property previously. It also is based on a set of figures the assessor has based on square footage, garages, condition of the home. If it's brick it assesses for more than wood, etc....

There is no way of telling what the appraisal will be, however you should make your offer to purchase subject to the property appraising at or above the asking price.

Good luck!

Answer 2

The appraisal that the bank is going to do is a different type of appraisal that what the tax folks do. The tax assessment of value is actually an appraisal, but for a different purpose using different methods to determine the value. However, the tax appraisal might actually be accurate; or it may not. It can be dangerous to determine a sale price based on the tax value. As you can see from the other answers, the tax value is rarely spot-on to a sale price. The tax folks just have too many properties to assess to be that accurate every time. The bank appraiser, assuming it's a full appraisal, will devote most of the day in a delicate process to determine a value for one property alone. This includes a visit to the property - when do you think the tax folks were actually inside the house? Probably when it was built. The bank appraiser will then select comparable sales that are specific and most similar to your property. Therefore, the bank appraisal will have a higher probability of accuracy. I recommend an appraisal just in case the tax value is too high to begin with. The appraisal fee is typically $300 to $350.

Some banks are now using what's called AVM, or Automated Valuation Models. That's fancy talk for computer appraisal. Created specifically for in-house decision making, it serves it's purpose but is not likely going to be very accurate for a variety of obvious reasons. Go with the full appraisal anyway, even if it's on your own separate dime. A value above your sale price usually indicates a good deal. A value equal to the sale price is usually a fair (equitable) deal, and happens 75% of the time. I've heard some deals where the bank used the tax appraisal for the mortgage approval, but only when the buyer has a 50% or more down payment.

If the bank appraisal is less than your sale price, you have the option of renogotiations with the seller or coming up with the difference out of pocket. The bottom line is that the bank appraisal and tax appraisal are two totally different things. But I am worried that the tax value was used to determine the sale price; that's risky.

Answer 3

It depends on the market. The house next door to me sold for $25,000 over tax appraised. I bought my home for nearly at appraised. I am looking today at a rental property that should sell a little under appraised.

Look for the local tax assessor's webpage. You can get this by searching with the city's name and keyword assessor. You are looking for the site of the local tax assessor. Here you can not only pull up the house info, but you may also search for sales of comperable homes in the area over the last few years.

Looking to see what similar houses in similar neighborhoods have been selling for is a useful barometer. Before looking at the investment property I'm seeing later today, I ran a search and I know that, priced at tax assessment, it is likely worth another 10-12000, as long as it isnt a train wreck inside.

You can also get information about the owner from the tax assessment site, such as how much did they pay and how long they have held the property. If they paid a lot and have had it short time, they might not have much room to drop the price. If they've had it some years, they likely have some equity room to negotiate.

So... hate to say it, the answer depends on several things. And a house is only worth what someone is willing to pay for it. Step back and crunch the numbers. You make money when you buy a house carefully, you simply collect it when you sell. Buy it wrong based on emotions and you might get burned. This does NOT mean her house is not priced well. You need to do a little research first.

You will NOT have to pay the "extra" out of pocket. The bank will look at your buying price, and look at the property to see if the asset reasonably covers the price. Unless it is outrageous, I'd expect the loan to cover the amount over assessed. 10K isnt a crazy number above, if thats reasonable for the market and the area.

Answer 4

The tax assessor might actually visually inspect any single property once every several years. There's simply not enough time or people to do it more often.

So, they use whatever information they have about your home, and how it compares to the neighborhood, to come up with a taxable value for your home.

Historically, in most areas, this number was lower than your actual value, in some cases 10-40% lower. Assessors have gotten more aggressive in the past few years, and are getting closer to real values, but they still want to stay lower than real value whenver possible.

This limits the amount of people who might show up complaining or appealing the assessed value of their property. If everyone came in saying their home was worth $5-10K less than the assessment, their office would collapse.

When getting financed, your bank will contract out for a certified appraisal. The appraiser will actually enter the home and see the condition and amenities, compare it to recently sold homes in the neighborhood, and come up with his OPINION of the home's market value. It is still just an opinion, albeit an experienced and educated one.

And banks lend on the lesser of purchase price or appraised value. The appraised value will typically match or exceed your purchase price, unless you are really buying it for more than it's worth.

You should be just fine. The tax assessed value will have zero bearing on your financing.

Answer 5

The tax assessment is different from a market appraisal.

A tax assessment is used to determine your property tax burden. An assessment is typically made by the taxing body every few years, and increases can be limited by law.

A market appraisal is determined by what the market will bear for your home, and there are no caps involved there. Thus, you might see an old home whose tax assessed value is much smaller compared to its market appraised value. My first home was like that, where the tax assessed value was 1/3 of the sale price when we left.

Because my new home has no track record, the taxing body determined that my tax assessed value is the same as the price that I'd purchased the house.

Don't worry about the tax assessed value affecting your ability to mortgage the home to the point the bank is offering to finance (%age of sale price). What you should worry about is if the market appraisal is much lower than the purchase price. That's a completely different subject altogether...

Answer 6

A tax assessement is NOT an appraisal. IN my area homes are typically asssessed at 25%+ less than they are appraised.

Example?
I bought my house for $265K in December '06
It appraised at closing for $285K
It was assessed at 217K

VERY big difference in my county. An assessor typically only visits a property ever 7 years, and the values are not adjusted at the same rate as the market.

Answer 7

No, County evaluation is for tax applications. that's UNRELATED to the honest market fee. I stay in a city the position houses that are priced at nicely over $a million million have a tax fee of basically $300K.

Answer 8

call the lender.....i don't think the tax appraisal would effect your loan amount.