Whether you are buying a house or selling a house, be aware that assessed value, appraisal value and market prices are not the same thing.
Assessed value is used to determine your property tax. It could be lower or higher than the house appraisal value. If you bought your house 10 years ago, your assessed value will be based on the sales price at that time and adjust slightly every year after that (usually around 2%). Even with the price corrections over the past two to three years, the current
appraisal value could still be much higher than your assessed value.
On the other hand, if you bought your house in 2006 or 2007 when the market peaked, your assessed value may be higher than the current appraised value. In this case, you can
appeal to the county assessor office to lower the assessed value, which in turn can lower your property tax.
One of the key methods to determine the house current appraisal value is to use the sales price of the comparable houses sold within three months. Because of that, in a rising market, the appraisal value may not catch up with the market sales price. We had a few cases laterly that the houses were sold higher than the appraisal value. For the same reason, in the downward market, the offers a seller get can be lower than the appraisal value. This also happened later last year when the market was at the rock bottom.
Add on top of that, all the appraisals are now done through lenders’ appraisal management company if you are getting a loan. Lenders are very very conservative on the appraisal value to mitigate their lending risks. Therefore, when you are buying a house now, do not back out easily just because lender’s appraisal value comes out lower than the sales price you offered.
Email me if you want to get comparable analysis of your current house or the house you plan to buy.
