How to know of Incorrect Appraisal

Question

How can I know if an appraisal was incorrect?

in 2022 I purchased a home in Kansas City, MO 64127 for $150k, the appraisal came in at $150k, but when i see the county assessment come in with the numbers below, should I suspect that I got ripped off? I do suspect that I got ripped off a bit because nothing in that area is really $150k, but the market vs assessed total is so drastically different.  and yes the there was some light remodeling in 2022 when the home was purchased, but for years later the assessed value remained drastically lower. Is this normal or should i be alarmed?

Kevin Sobilo · Answer

1. Assessed is not a valuation in your chart. Another SILLY thing they do in some places is set the assessed value as a percentage of the estimated market value. Looks like your area uses 19%. Its SILLY because it just makes the math more convoluted and makes it harder for people to understand how their property taxes work. It has no real impact on what someone would pay.

2. They may or may not be doing a new assessment every 2 years where you are. They are surely not doing a real re-assessment where they collect all new data. They are likely doing a statistical update based on recent sales. So, if your area appreciates more your values go up whereas if you are in an area where values go down yours decline.

3. Funny thing is if values decline your assessment may go down but your taxes may still go up! Again people don't understand the process well.

4. Assessments are an imperfect and somewhat convoluted process that is not relevant to how much your property will appraise or sell for.

In my area assessments are based on 2008 values and a property assessed at a full market value of $85,000 might sell for $225,000 today.

If they updated the assessed values from $85k to $225k AND all properties went up by a similar percentage then everyone's tax bills would remain basically the same assuming no increase in government budgets. Crazy, but true!

Pegah Ghannadian · Answer

@Kevin Sobilo thanks again. and from what you're saying in short, sounds like I may have not been ripped off, the appraisal could have been legit. thank you and yes very confusing

Janice Carter · Answer

Pegah, the assessed value and appraisal value are not the same. If you were selling your home tomorrow, you wouldn’t use the assessed value to determine price, you would use comparable sales. It is very common for assessed values to be lower or lag behind market value, so that alone doesn’t mean the appraisal was wrong.

Pegah Ghannadian · Answer

@Kevin Sobilo thanks for info. I understand the city would never know what kind of updates have been to the property, therefore couldn't have a fair assessment.

not sure if you see the screenshot I provided in my original post. In the 64127 area, the county assess every other year.

My concern is that when I purchased in 2022 for $150k, both the assessed and market total come in way below $150k that the appraisal came in back in 2022. $130k difference. and now when I tell realtors I bought the home in 2022 for $150k, they are stunned that I paid so much for being on the wrong side of the freeway. I guess I am trying to find out, if I was over charged? and I did purchase through a turnkey seller (Rent to Retirement), where they probably upped the purchase price. the appraisal also took prices from the 'good' side of the freeway. attaching here

Kevin Sobilo · Answer

@Pegah Ghannadian, a few thoughts:

1. An assessed value is made as of a certain time. In many places assessed values are only updated occasionally. In my county, they were last updated in 2008. So, by definition they do not reflect today's prices.

2. Assessed values are made with incomplete information. The government generally does not have the right to come into your home and check it out to assess it. You MAY choose to allow them inside but generally are not required to. So, the assessor is making assumptions about condition that may or may not be correct. That adds to the differences in valuation.

3. Sometimes the state will track how accurate assessed values are and provide a ratio to apply to assessed values in your county to show about what the value should be today. In my state that is called the Common Level Ratio.

So, that ratio when applied to an assessed value gives an ESTIMATE of what that 2008 assessed value would be with today's market values, but this is based on averages. So, its again not accurate for an individual property.

Pegah Ghannadian · Answer

@ed

@Ed O. yes, I did buy from a turnkey seller. from Rent to Retirement to be exact. could you elaborate, please, interested to hear what is happening to others. thank you

Ed O. · Answer

Did you buy from a turnkey seller? There's a coincidence of people buying from turn key sellers and having this sort of thing happen.

Stephen Geluz · Answer

Interesting question. County assessment and appraisal can be pretty different.

Caleb Brown · Answer

Assessment is usually off, either too high or low. I will say 64127 is on the low appreciating side. You are on the Eastern part which has rougher parts

Milton Chamberlain · Answer

Hi Pegah,

That eastern part of KC near independence has not appreciated at the same rate as other parts of the metro… more like 0 to 3% annually versus 4 to 11% appreciation for other regions I’m happy to help you out with a comprehensive comparative market analysis. That will tell you the market value which is around what your property would sell for today, and also the type of equity you have, which is helpful to know for things like HELOC or what your net proceeds would be after the sale

Just let me know!

How to know of Incorrect Appraisal

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