Pink House Team
Keller Williams Realty
806-340-7630
What is the correlation between assessed value and market value on your Amarillo home?
Working with buyers and sellers every day, I often hear that the "appraised value" is such and such. What they are referring to is the value that the Potter/Randall Appraisal District (PRAD) bases the taxes on for each house.
What I hear most often is (mostly from other Realtors) is that the property is priced at X amount below PRAD. Does that necessarily make it a good deal? I was curious about how PRAD comes up with their value so I called to find out.
Let me say, however, that for me it was a little complicated so don't take what I write here as gospel. If you have a question, please call PRAD yourself.
First, let me explain how an appraiser reaches "market value" when you are selling your house. The appraiser will visit the house in order to see what the condition of the property is. He take pictures, measurements and considers any other things that are pertinent to the house. He has a copy of the contract so he looks for anything in the contract that should be considered.
For instance, if the seller is paying any closing costs that would be a consideration. Is the price inflated to cover closing costs? Is it typical for the area that seller pays closing costs? Or maybe the seller is replacing the roof before closing. There are a number of things in contracts that an appraiser looks at.
After that, the appraiser looks for other properties that have sold in the area that are similar and he starts comparing. Usually an appraiser will try to find comparisons that have very recently sold. He will also look at current houses that are for sale and houses that are pending. The appraiser will make adjustments for number of bedrooms, bathrooms, or the presence of absence of central heat and air. He looks at the condition of the house and makes other adjustments. After considering at least a minimum of what I have listed above, he will reach a conclusion of what the market value of the property is based on thorough information. Market value=what it will sell for in the open market.
Now let's look at how the county decides on a value for tax purposes.
It is impossible for the appraisal district to do individual appraisals on each property in Amarillo each year. Therefore they do what was described as a "mass appraisal" I was told that that each house is valued at market value. "Mass appraisals", however, in my humble opinion are not going to be as accurate as an individual appraisal.
Some areas are easier to do mass appraisals on than others. For instance, Hillside Terrace is a neighborhood of similar houses. Some others areas like maybe NE Amarillo will be much harder. They aren't all uniform.
Let's look at Ridgecrest for a better example because the houses are similar but not as similar as Hillside Terrace.
Houses are categorized using an A-G rating system. A-- being houses that may be in bad condition, D--good quality homes or G--superior.
This was a little vague for me, but it seems like an A rating may be placed on a house that has had one owner for many years and it may be considered that the owner has not updated. On the other hand, if a house has recently changed hands and the MLS or another source shows that the house was upgraded with granite it may be considered a G for the neighborhood.
An A rating may be as low as 70% of PRAD's market value and the G may be 120% of PRAD's market value. The challenge is that maybe the A rated house has also updated with granite but the appraisal district may not know it--unless the neighbor tattles.
All of the values must be "equal and uniform" says the State:
Taxation must be equal and uniform. All property must be valued and taxed equally and uniformly. This applies to similar types of property (for example, all residential homes) and to differing types of property (for example, commercial properties and utility properties). No single property or type of properties should pay more than its fair share of taxes.
Therefore, since a neighborhood must be taxed equal and uniform they create an overall ratio for the neighborhood. Thus the mass appraisal. They aren't allowed to use an average (semantics to me) so they have to keep it within a "sales ratio". The overall sales ratio of the entire neighborhood must fall within a 95% - - 105% ratio of their determined "market value".
After the sale of every house, the new homeowner is asked to complete a form saying how much they paid for the house. I asked if they paid less than the PRAD value and they said that on the form, if their taxes would go down. No. It will just get thrown in the mix of "sales ratio".
You can appeal the value that is put on your house to try to reduce taxes. I joked that probably they never saw anyone come in to raise the value. He corrected me. Many people come to the appraisal district with evidence of the work they have done to get the assessed value to be higher. Why would someone do that? He informed me that sellers that are about ready to put their house on the market want to show that the PRAD value is more than what they are asking.
So going back to the original question, how does PRAD value compare to the Market Value from an appraiser? Well for those that sell a "deal" based on low PRAD, once it goes through the MLS and shows new granite it may move from and A to a G. New increased taxes. Just what I wanted. How about you?
Watch out for great deals. You usually get what you pay for.
Call me for a free market analysis to put beside PRAD's value to see where you stand!
Pamela Madore
Pink House Team
Keller Williams Realty
7304 SW 34th
Amarillo, TX Texas, Texas, 79121
806-290-1920
http://myamarillohomes.com
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