Why do tax appraisers not appraise a property based off of its real-world valuation at the time of appraisal? Why is there such a huge disparity between tax appraisers and real-estate appraisers for sale?
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Tax appraisers are constrained by the laws of tax assessment. These laws vary widely: from CA where the value can’t change unless the property is sold (thanx Prop 13), to other places where only the value of the structure is appraised, to places where the change is capped to X% per year.
it’s supposed to be the same but I guess they find that property tax appraisals are high for the low end of the housing market, about the same for the middle and low for the richest people ..
does make some sense, the richer you are the more you’re able to fight the appraisal but does fuck over the poor
When I got my house I paid less than what it was appraised for, when the property tax form came in I filed a dispute ‘I paid X so clearly it’s worth x’ and they changed it
I mean the only way to KNOW the real world valuation is to sell the house just cause someone puts a house on the market for X doesn’t mean it will sell for that much either
Realistically? Because they want to be able to “justfiy” giving people lower prices for various reasons.
The real reasons are the appraiser doesn’t like the area, neighborhood, the person with the house or the Bank just doesn’t want that property to be valuable (or DOES want it to be valuable) It’s a large set of regulations that protect the higher powers from giving one person an appraisal of $100,000 on their house and their neighbor, with a similar house $350,000.
If you have Netflix, there’s a show on there called “The G Word” that explains it all. or you could read how one man got a much higher appraisal on his house by having his white friend pretend to be the homeowner.
[https://www.cnn.com/2021/12/09/business/black-homeowners-appraisal-discrimination-lawsuit/index.html](https://www.cnn.com/2021/12/09/business/black-homeowners-appraisal-discrimination-lawsuit/index.html)
[https://abcnews.go.com/US/couples-lawsuit-alleges-appraisal-firm-undervalued-home-based/story?id=88700992](https://abcnews.go.com/US/couples-lawsuit-alleges-appraisal-firm-undervalued-home-based/story?id=88700992)
TL;DR: It’s about keeping the poor people in line.
The real world value is by definition the price of the sale when it occurs.
1. Not every property sells at the same moment.
2. Property value is a fascinating and complex thing and even large data sets cannot reflect the actual value at sale.
3. All of the properties and all of the taxes are set on the same day, after that date no new information is incorporated.
4. In a period of time where homes are selling for above asking prices the general value of appraised homes will be understated.
5. In a market like 2007 there were homes selling for less than the previous purchase price. The general stock of home are undervalued.
6. Political and non governmental actors make policies that impact the demand and supply for homes.
7. Socioeconomic trends such as people moving at retirement change the market place.
I live in Florida and home prices here have been growing faster in prices than a place like Ohio
Tax appraisals are much lower resolution. They’re *typically* not going to every house to assess quality of finishes, whether you’ve got an end unit of a townhome, how well it shows, and updating the appraisal based on the last three vaguely comparable sales nearby.
They do a big picture snapshot and then use an equation based on information they have on paper to assign a value to each house – square footage above/below grade, bedrooms, bathrooms, plot size. Then they might only revisit the valuation weighting once every 5-10 years.
A mortgage appraisal, OTOH, has someone come out and actually look at the place, then do a deep dive of the last few comparable houses, trying to make sure they’re as comparable as possible. They’re using data that the taxman isn’t, both in terms of how up to date it is and the scope of data available.
>ELI5: Why do tax appraisers not appraise a property based off of its real-world valuation at the time of appraisal? Why is there such a huge disparity between tax appraisers and real-estate appraisers for sale?
In my state, annual property tax increases can’t be higher than the rate of inflation unless a property is sold during the year.
I bought a house four years ago, and the property tax went up by about 50 percent compared to what the previous owner paid.
Four years later, my house is worth roughly double what it was when I purchased it. But my property taxes only go up by about 3 to 5 percent a year.
If my property tax was double what it was four years ago, I would have more difficulty paying the mortgage plus taxes. Someone who was barely making their mortgage + property taxes might be forced into foreclosure.
So the limits on property appraisals are designed to avoid those sorts of shocks.
How well they work and whether they are worth the other problems such limitations cause is still widely debated.
There are a lot of complicated explanations below, but I think the best answer is, whatever the mechanism, ***”Because rich people want it that way”***.
Some properties have recent, real world valuations while others do not… some information is known, others is not.
Say there are 2 similar homes — same size lot, same size square footage. One last sold in 1980 for $50k. The other sold in 2022 for $500k. Before it sold, the owner spent $150k replacing the kitchens, bathrooms, flooring, painting, new lighting, etc.
So what’s the value of the old home that hasn’t sold in 40 years? Tax appraisers don’t go into every home to document how nice the finishes are, how recently the kitchen was last updated. At best, they do a cursory exterior review to verify that lot size and square footage roughly match what the county has, that type of building is consistent, etc.
They do. But as others have said, they have to comply with the laws of tax appraisal in their state/jurisdiction. In Texas, for example, tax appraisers can only ask you to voluntarily ask you how much you sold a house for. You’re not obligated to tell them, and they can’t rely on third party sources for sales data.
They also have to appraise tens (or hundreds) of thousands of properties every cycle. They can’t do a physical inspection of each house.
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