Assessed value as proxy for Market Value?

Question

Hello BP!!

Should one look at assessed value for tax purposes on government website as proxy for fair value. The property I am looking has a listing price of over half a million, however, the on governments website - the assessed value is only 260K - I understand that market value for tax purposes may not be very recent - but does one see such large differences and should the market value assessed for tax purposes should be a guide for fair market value?

Christopher Phillips · Answer

@Tushar Shah

Square footage is a dicey subject. Sometimes it's there, sometimes it isn't.

Most agents won't put it on the listing due to liability of getting it wrong and being sued later.

If there is an official floor plan number for apartments the agent might feel safe including it.

But, for houses it's too much if a risk. Agents usually aren't trained enough to determine square footage

and two different appraisers might give you two different numbers.

So, in general, the tax assessment numbers are only good for knowing what the taxes are, not for anything else.  If you want to check for proper Permits and Certificate of Occupancy you need to visit the buildings department.

Tushar Shah · Answer

@Andrew Johnson Ah Ok. The MLS listing does not show sq ft information for some reason. My agent is inquiring and finding out more. The assessed value did provide sq ft information. But as you said I will try and see if they tally up. Thanks for the tip.

Tushar Shah · Answer

@Andrew Johnson Thanks Andrew - I am not sure I completely follow your last statement - " What I do like to see on the assessors site is any reference to the improvements on the land, square footage, etc.  If it doesn't match the listing there may be a reason but I'm definitely asking the question." - What exactly am I looking for?

Tushar Shah · Answer

@Christopher Phillips @Jeff B. Thanks Christopher and Jeff. Its a relief to know that there should be not be a strong correlation between the assessed value and the listed/purchase price. Looking at comps become tricky as not two buildings are the same. One may be re-habbed or closer to a bus stop or train station. One may have sold for lower price because of cash deal or in need of cash. Too many factors play into looking at comps.

Andrew Johnson · Answer

@Tushar Shah Nope.  You could argue with the assessor's office after you own the property about their inaccuracy.  But that would be tantamount to begging for a higher tax bill.  Which is why nobody does it and hopes those values stay low.  What I do like to see on the assessors site is any reference to the improvements on the land, square footage, etc.  If it doesn't match the listing there may be a reason but I'm definitely asking the question.

Jeff B. · Answer

To be more clear;

• I bought in 1993 at 213k which set my tax assessment
• today, the FMV is >500k

Jeff B. · Answer

NO - NO - NO.

Just try objecting to the assessed value and you will get the instant reply

• "will you sell me your property for the assessed value?"
• HECK NO!

States vary greatly in how the assessed value is determined and then the tax rate based upon that value.  In Calif, we have the Prop 13 rule that the property is assessed at full sales price and taxed at a 1% rate of that value - - makes for stable property taxes :)

So FMV is more closely determined by COMPS, not the assessed value.

Christopher Phillips · Answer

@Tushar Shah

most counties/municipalities, no.

The tax assessment isn't always up to date, often lags by 1 to 2 years, they often don't enter the premises.

Also, the assessment's main purpose is to portion out the operating budget across the residential and commercial owners in the area. So, it is often factored in a way that makes it have nothing to do with prevailing market values.

Assessed value as proxy for Market Value?

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