It is that time of year again. We have all received our new tax bills. Although some are astonished by the amount their taxes have increased, those of us in the real estate industry should not be taken by surprise. As a licensed residential real estate appraiser,
I am aware of the fact that tax assessments are usually a year behind the market. Take a look back at last year. Many home owners were basking in the glory of the equity accumulated due to an outrageous real estate market. Now however, the market is adjusting
itself into more realistic values, many home owners are getting a reality check.
Although I do not have experience in mass appraisals, I will try to explain the difference in tax assessments and real estate appraisals. First, we need to understand the difference between an
appraised market value and a tax assessed value.
o The definition of market value as defined by USPAP (Uniform Standards of Professional Appraisal Practices) is an opinion of value that presumes transfer of a property, as of a certain date, under specific conditions identified by the appraiser.
In lender’s terms it means the most probable price a property should bring, as of a specific date, in a competitive and open market under all conditions requisite to a fair sale. The buyer and seller are prudent and knowledgeable and the price is not affected
by undue influence.
o A mass appraisal is defined as the process of valuing a universe of properties as of a specific date using standard
methodology, common data, and allowing for statistical testing. In other words, a mass appraisal value is determined by using models, statistics, and ratios.
Market value is determined by using sold properties within a particular market area. The value is derived from the market, not through models and charts.
When a mass appraisal is conducted, city assessors do not normally enter a property to obtain interior information. They rely on public records and building permits to record room count, number of bedrooms, number of baths, floor coverings, heating systems,
etc. An exterior inspection is usually completed annually to verify any additions or deletions to the property such as living area, decks, covered porches, etc. They also look at the exterior walls, foundation, and roofs. Once this data is obtained, it is
compared to other similar properties in that neighborhood. A statistical model is used to calculate the value of each structural improvement. This value is then multiplied by a factor to obtain a tax value. Your local city assessor’s office can answer any
questions you may have on your tax bill. You can also read more information on my site by clicking here AssessmentAppealServices