Tax Value VS Appraised Value: How Do you KNOW?

Real Estate Agent with Residential, Investment properties, rehab projects, property management, luxury homes, new construction!

       Tax Appraisal VS Market Value 



A very common issue that comes up while showing or selling houses is when the prospective buyer or seller points to the county appraisal district for value. Most of the time, it's the buyer that points to this value. And oddly enough, when I work with someone buying AND selling, the appraisal district is seen as an authority on the purchase side but never on the sell side.


Why would that be?


Here's the scoop:



                                                                  Here's The Scoop On Home Appraisal values


First, the tax appraisal office is not actually an appraisal in the true sense of the word, where someone comes out and sees the house they are evaluating. This is done by the tax office who takes sales data and also tax needs into consideration to decide how much a "neighborhood" might have appreciated or depreciated over the last year. Let's say they decide that SEVEN MEADOWS appreciated 6% last year. That may or may not be true but they apply it across the board to every house in the area.


Next, a lot of homeowners will protest their tax rate to reduce tax burdens. Generally the taxing authority tries to pick a number to raise values that will bring the least amount of protests and yet generate the most amount of revenue. When people protest, they will often be able to get at least a small reduction in their value.


Lastly, tax appraisal does not take ANY account of property condition UNLESS someone protests and shows that their property is not at the same condition as "neighborhood norms".



So on the SELL side, the value looks low and most sellers understand their property is worth more than the tax appraisal value.



On the BUY side, the buyer looks at the tax value and assumes that the property is overpriced. Tax values and automated estimates (such as those provided by ZILLOW and other automated companies) are generally very inaccurate when deciding what to pay for a property or what to sell a property for.




The only reliable way, as Texas is a non disclosure state when it comes to public record of sales price, is to get with REALTOR® that has access to recent sales data or with an appraiser, who actually looks at the same data as a REALTOR®.


While we're on the subject of the TAX VALUE of your home, make sure you have filed your HOMESTEAD EXEMPTION if you were in your home on JANUARY 1st 2011!  I've attached the Harris County, Fort Bend County and Waller County Homestead Exemption form to this blog for your convenience!

Comments (3)

Greg Nino
RE/MAX Compass, formerly RE/MAX WHP - Houston, TX
Houston, Texas

Buyers also assume if they see a negative percentage in tax value that the homes value has declined when it means nothing more than a succesful tax protest; neither of which determine real value, like you mention. Hope all is well!

May 01, 2011 11:40 AM
Kathy Clulow
RE/MAX All-Stars Realty Inc. Brokerage - Uxbridge, ON
Trusted For Experience - Respected For Results

Ron - some agents (who do not understand the reality of assessed value calculations) actually use them when presenting an offer ..... assessed values are a contrived value using mass market analysis based on sometimes inaccurate data and subjective opinion. ..... They can be off by upto 40% from an actual sale, in either direction, and the assessor will still stand up in an appeal hearing and say that the property assessment is fair and equitable. for a real eye opener check out realtax here in the rain

May 01, 2011 05:12 PM
Ron Tarvin
Residential, Investment properties, rehab projects, property management, luxury homes, new construction! - Katy, TX
Broker, Katy, Houston, Cypress 77450,77494,77095

You're right, Greg...I've been approached by the "declining values" issue before as well.  Good Point.  All is well.


Kathy, I've seen that too when agents will say they got their offer price from a percentage off of appraisal district values and I just have to laugh because you KNOW you're not working with someone who truly understands property values.

May 02, 2011 05:27 AM