Assessed VS Appraised
I'm thinking about buying a property that is like 30k below the assessed value. I'm not sure what the Appraised value. Can an appraised value come in lower than the assessed? What do banks look at when I wish to take out a home equity loan against a property? Do they look at appraised? or market value?
-Dale
Typically assessed values lag appraised values by several years. Case in point- my house appraised value of 190k, assessed value of 145k. Makes the taxes cheaper than they should be. The county or city takes alot of flack when they raise assessed values-near riot conditions when they raise them at the same rate that the market is going up. On very rare occassions does the assessed values represent reality.
I guess I asked this question due to the information I know. This property I'm checking out is for 56,000 and assesses at 67,000. From your information this house should appraise for even more.
[addsig]
Hi All
clevincc, that’s what I’ve come across as well. I've noticed that for instance, if I look up my house or any house for that matter on our county assessor’s website the assessed value always seems to be approx 75% of the actual value.
ddemott, I just noticed that you are in Janesville. I grew up in Janesville. Haven't been back in almost 20 years. Just thought I'd say Hi. Good luck!
[ Edited by pataz on Date 10/24/2003 ]
For a very good discussion on assesed/appraised values, go to the wholesaling forum, and peruse the topic, The Right Price / Comps.
Wanted to touch base on one thing though. In no way should you let the assessed value by the county/city affect your decision to buy. The assessed value is simply what the taxing jurisdiction estimated the fair value of the property to be as of 12/31 of the following year, at least in my state. Keep in mind that they are not appraisers. The assessment, in my opinion/experience, has no corelation between the FMV.
I encourage you to view the other topic mentioned above, it goes into more detail.
The assessed value, as discussed, is the amount the county taxes the property at. It is true, that the assessed value is mostly under the actual value (FMV). I usually (as a rough est.) figure 120 % of the assessed value to get to the FMV. This assumes that the assessed value is correct. The appraised value is the "opinion" of the appraiser and this value is used by the bank in the granting of a loan. While some appraisers are not worth their fee, most are. In the estimation of value for a purchase, your best bet is to have a RE agent do a comparitive market analysis (CMA) to get the market value. Getting an appraisal is not best, because the bank might not accept the appraisers' work. (Wasting your money.) The appraiser works for the bank, not you. The appraised value is the "market value", they are one and the same. In the event that you purchase the property, discuss your wish to the appraiser to have the property appraised at the "full" market value. Sometimes appraisers only show the value to the amount of the loan +2K or so. Remember they work for the banks. With the "full" value of the appraisal, you can borrow for the full amount from the bank, without taking out a second, or HELOC. (higher interest rates too.)
there is no correlation between assessed value and market value - except the very loose connection that assessed is typically lower than market.
Opinions amuck...
You are all right. Each answer is a different way to look at the same subject with the same opinions.
Been trying to guess property values, at the beginning of a mortgage loan call, for 10 years now and I still use the assessed value times 120%. No it's not perfect, just close and hasn't failed me yet. Now, I must stress that this stuff is area specific and I'm talking about Maryland Assessments., so there's my disclaimer.
hope this helps,
clear2close
[addsig]
I agree with dickknox, one has little to do with the other.
In most cases, you may be right about the 120% rule. However, like said, that would depend on your area. Here, tax values were newly assessed (2003), and came in at or ABOVE FMV in most cases (talk about a civil uproar). Also here, the plan is to re-assess every 2 years to better reflect market value.
So you see, to properly use tax value as an estimate, you have to know what your area is doing with them.
Roger
Roger seems to have the most accurate answer. From experience (several times) I have had the assessed value within a few thousands or higher than the actual appraised value. It really does depend on the area. You should be especially careful in slow growth areas.
FYI: I'm a loan officer and before i waste my customers $300 on an appraisal, I'll go online and check out the comps in the area. Pretty similar to what appraisers do when they don't have a clue. It has been helpful to me over the years. There are several websites and it is free. I use ****Must Reach Senior Investor status before posting URL's*** and ****Must Reach Senior Investor status before posting URL's***. Let me know if you need any additional help.
ok...I guest since i'm just a rookie when it comes to investing I can't post websites.....if you'd like to get the info, just shoot me an email.
just one thing to add, appraised value is not always market value. Here in Atlanta market is well below the appraisals. When appraisers go out they are told the amount of the loan that the person is trying for, and are supposed to reach that number or the bank/lender can not make the loan. If they do not get the number the bank mught also not use them again. So they might find a way to justify the numbers, or not take the work at all. Market value is what someone is willing to pay for the property, and that can vary dramatically. If you have 10 properties in a neighborhood, the market value could drop quick. Assesed value is what the city puts on as the value and that can change from city to city to the acuracy. It is just about always below the market value of a property, and it can be dramatically below. In Colorado I know a property that has a market of $100K but an assesed value of $5400. What they are doing is leaving the prop value alone and raising the mil rate, or the rate per 1K of value that they use to tax you. This is the friendly way to make you think you are getting away with paying lower taxes. You bill says your house is worth 5K, and it is worth 100K.
There is a flip to this also. If the market in an area drops alot the market could get close to the assesed value if the city has been raising the value and not the mil rate.
I must admit that I did my first appraisal on my first week as a loan officer in a mortgage company in Beverly Hills. I did look at the assessed but it was over 2 yrs. So I took my Abacas and Tape measure and went out and measured everything. Even the amount of tile on the kitchen cabinets. I took pictures of everything even the dog house and the abandoned Chick Sale Special with the funny quarter moon carved in the door.
I returned and drew my plan of the house and the lot etc. etc.. filed in the form exactly, attached my pictures and gave them my opinion based on the five comps that I had looked at in the area. . Lots of work and I was wrong about 50% off. Why? Very simple I had neglected all of the for sale signs. Almost every house.
A new tract had just completed about six blocks away and for $100 down why not move up to real plumbing, non leaking roofs etc. etc. Sooooo I learned.
Moral: Look at everything and form your own opinion.
I bought the house for the price of a used VW Beetle. Moved in, and went to work. I ended up with an attractive very elderly house, what they call a painted lady. I think this is the first time I saw real lead pipes. Explains the retardation of the prior owners. This house was so old that I painted the house numbers in Roman Script. The ghost's wore Togas!
Cheers Lucius
Quote:
On 2003-10-24 18:15, Todd_RE_Investor wrote:
The assessed value, as discussed, is the amount the county taxes the property at. It is true, that the assessed value is mostly under the actual value (FMV). I usually (as a rough est.) figure 120 % of the assessed value to get to the FMV. This assumes that the assessed value is correct. The appraised value is the "opinion" of the appraiser and this value is used by the bank in the granting of a loan. While some appraisers are not worth their fee, most are. In the estimation of value for a purchase, your best bet is to have a RE agent do a comparitive market analysis (CMA) to get the market value. Getting an appraisal is not best, because the bank might not accept the appraisers' work. (Wasting your money.) The appraiser works for the bank, not you. The appraised value is the "market value", they are one and the same. In the event that you purchase the property, discuss your wish to the appraiser to have the property appraised at the "full" market value. Sometimes appraisers only show the value to the amount of the loan +2K or so. Remember they work for the banks. With the "full" value of the appraisal, you can borrow for the full amount from the bank, without taking out a second, or HELOC. (higher interest rates too.)
This is a great point. I just recently purchased a property and the bank's apprasail compsny so "coincidentlly" appraised the property at the same markt value as the loan. I'm not sure that it was afull market value appraisal, had I know I would have asked . This is some great information that everryone is giving me.
A harty hello to you to from Janesville. Hope all is well!
-Dale
Quote:
On 2003-10-24 17:30, pataz wrote:
Hi All
clevincc, that’s what I’ve come across as well. I've noticed that for instance, if I look up my house or any house for that matter on our county assessor’s website the assessed value always seems to be approx 75% of the actual value.
ddemott, I just noticed that you are in Janesville. I grew up in Janesville. Haven't been back in almost 20 years. Just thought I'd say Hi. Good luck!
<font size=-1>[ Edited by pataz on Date 10/24/2003 ]</font>
"This is a great point. I just recently purchased a property and the bank's apprasail compsny so "coincidentlly" appraised the property at the same markt value as the loan. I'm not sure that it was afull market value appraisal, had I know I would have asked . This is some great information that everryone is giving me."
emayah, The first house we bought and then sold 5 years later just happened to be appraised at the price we bought and sold it for, both times, exactly. I was always under the impression that this seemed to be the norm. I gotta tell you it sure was nice to have the difference 30k in our favor too! That was one of the things that spurred me on to look at REI a bit more closely.
Best wishes,
Pat
Hi all,
I am looking at a property that is $20K below assessed value. This is the first time I have come across this in my area - the assessors are usually at 75-80% fmv. I would like to get a loan based on the appraised value yet my lender says I can only borrow the asking price and in six months do a cash out refi. Any help on working this deal so I get $ 20K in my pocket? Thank you.
Without letting the seller know there is no way to do this with a mortgage lender. If the seller is willing and involved have the sales contract increased by 20K with the verbiage that these funds are going to be used to improve the property. Other wise get an independant appraisal and go to a HML
I pay little attention to assessed values. Although every town has its own rule of thumb that may usually work, there are usually many exceptions. For example, I have one house that is assessed at exactly what I would expect the market value to be(this was confirmed by my realtor also) and I have another house that I will be contesting the assessment of because it is assessed at close to twice what I could get for it. These houses are only about 7 blocks away from each other. Where I live they seem to assess areas higher that have a high number of rentals. I guess they are thinking landlords have deep pockets. There seem to be few inwestors who contest the values which is what I think they are counting on although they would never admit it.