Real Estate Agent with Your Friend in Real Estate, LLC

Some are convinced that market values for homes can be somehow predicted from government tax assessments, not to be confused with professional appraisals. No doubt some of the confusion stems from the fact that assessment and appraisal both begin with the letter "A." Indeed, the stated goal of most local tax assessors is to assess in relation to market value. Of course, an average relationship between tax assessments and contract prices of recently sold homes can be calculated easily. But the idea that a government employee sitting in an office with some records and a computer can predict the market value of a specific home is ludicrous. If this were true, the entire professional appraisal industry would be out of business. If you must, call your local tax assessment office and ask what contract price should be expected for your seller’s home. Also ask if the assessor will use the tax assessment to set the price for his own home when he sells. Putting stock in tax assessments will be dangerous: You will be either setting too high an initial price or worse yet, you and your seller will be ready to accept too low an offer. Use of tax assessments is easy, but it is a violation of your fiduciary duty to your seller.

Tax assessments have only a very general relationship to a home's market value: It is so general as to be valueless. Those who tell you there is a direct relationship are relying on a very few bits of data, or they are repeating "what everybody knows." Statistics prove them wrong, both over a wide area as well as in a limited area. To predict a specific contract price from a tax assessment, one needs to guess an exact percentage factor to multiply by the tax assessment to obtain the predicted contract price, with absolutely no basis for making the guess. This percentage factor varies so widely (as much as 50% to 200%) that it is un-guessable.

Of course, there is some average relationship between tax assessments and market values that can be calculated. But use of this figure to determine the market value of a specific property should be enough to make even the tax assessor giggle. He's never even seen the home. But amazingly, there are highly touted calculation systems that rely on tax assessments, at least one (unbelievable but true) with a US Patent! Although the math is indeed logical, the fact that the basic tax assessments are flawed, makes the entire method a sad farce. A focus on the calculation method and on the approval of others, obscures the basic defect to all but a very few incisive individuals (like us) who seek statistical verification of the underlying data, the tax assessments themselves.

While it is deceptively easy to read a home's tax assessment from government information, it is deceptively inaccurate. There is no substitute for a properly prepared market value analysis or an appraisal. Mortgage lenders do not rely on tax assessments, and neither should you. But just dream for a second... how easy it would be if it were true, for agents as well as for the buyers and sellers who would be freed of those messy price negotiations. But sadly, tax assessments are useful only to determine how much real estate tax one will pay, nothing more. Ideas that sound good are not always right. Be armed with the facts!


BTW, do you think Zillow uses tax assessments in their al-gore-rhythms?


This article is excerpted from David Rathgeber's
which is free online at

Posted by

David Rathgeber 

Your Friend in Real Estate, LLC

Broker / Owner and NVAR Lifetime Top Producer

703 434 0773 / /

Serving the Washington DC metro area since 1987

Comments (2)

William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

Tax assessment values are hard umbers only and do not consider many other issues

Jul 16, 2017 09:45 AM
David Rathgeber
Your Friend in Real Estate, LLC - Arlington, VA
Broker/Owner NVAR Lifetime Top Producer & Author

Thanks William, you hit the nail on the head again!

Jul 17, 2017 06:35 AM