I am wondering since I had a house that I was interedte din buying appraised at $115k but the city assesment says approx. $92k.
Is this normal?
Thanks!
It really depends on the area. In my area, assesments are a fixed percentage of appraisal, so the numbers never agree. Our house was just re-appraised, but much higher than our appraisal for refinancing, we appealed, got the appraisal down. The assesment then changed too.
When the county wants to raise taxes without saying they are raising taxes (ah, lying politicians, where would be without them?) they change the percentage of appraised value that the assesment is. Same result.
OMG, I can actually answer a question for once!
My background: for ten years I was a fundraising prospect researcher – i.e. someone working for a nonprofit who tries to find out the net worth of potential donors. Part of my job was snooping around public records, such as property tax assessments, to see how much our prospect was worth.
So, here’s what I know. The short answer: yes, it’s very normal (in the U.S., anyway).
Longer answer: tax assessments represent the home’s market value multiplied by a figure called an “assessment ratio,” a percentage value that varies wildly from tax district to tax district.
These assessment ratios can be pretty low, resulting in a pretty confusing figure (if you’re not aware of this practice). For example, if the assessment ratio is “5,” the assessed value on a $100,000 house will be 5% of that figure, i.e. $5,000!
You can find out your ratio by calling your locality’s tax assessor and simply asking, “hi, can you tell me your current assessment ratio to market value?” Tax assessments are public information, so anyone can call (in some areas it does take a face-to-face visit, but I never came across this requirement in my former job as fundraising researcher).
BTW, another important thing to find out is when the assessment was done. Some towns don’t do these assessments all that often, so you could quite possibly be seeing an assessment take from several years ago. Obviously home market values change over time, so take that into account when calculating the rough market value.
Hope this helps! Uh oh, I took too long typing this, since on preview I see your question was basically answered. Well, I’ll post this anyway just in case you want more info. 
First, to directly answer the question: yes, it’s highly normal. Think about it this way, how many pieces of real estate are there in your county? Tens, hundreds of thousands? How would you keep track of the precise value of each and every one of them every year?
The answer is “poorly.” Many states have laws requiring that the property get an exterior inspection every so many years, and at least around here, they get reappraised in a fashion every year. The method they use is a giant multiple regression known as Computer Aided Mass Appraisal (CAMA). You feed in some data about all the homes in the county, including quantifications of highly subjective items, and feed in all the new sales data that comes in from the County Clerk’s office (and trust the revenue stamps or equivalent are accurate). The computer spits out values, and you move on. It doesn’t do it terribly well, but it successfully manages to attach a value to every piece of dirt in the county.
In some (most, possibly) counties, immediately after you buy your home the value is set at what you paid for it. Then they bump it up annually as the software dictates.
Most of the time, the software is off by 10% or more if the property hasn’t recently changed hands (or if that sale was not a true market sale). For commercial real estate, they usually grossly underestimate contributory land values, then grossly underestimate construction costs and wind up with a value 1/2 to 2/3 of the actual market value for newly constructed properties. They also have no clue about income approaches (they have no time to perform any, really) so in cases of significantly distressed properties with extensive external obsolescence they typically over value them by 10-30%.
So, I guess the short answer is, yes, your situation is typical. The values assessors come up with are essentially “untouched by human hands”, and they really have no real clue as to exactly what your home is worth. But if they value it higher than you think it’s worth, ask your assessor about an “informal tax protest.”
Incidentally, I doubt in this case you have an issue of “sound to assessed ratio” here. I’ve never seen such a high ratio without it being 1/1 (California is like that). Around my part of the world, the sound to assessed ratios are typically less than 20%, and can only be changed through a super-majority vote of the people.
desdinova
general real estate appraiser
Since you’re talking about this in relation to buying a house, go talk to the folks in assessing and see how it works. I say this because we have a really, really cool thing in Michigan that our last governor swung. In exchange for a sales tax increase from 4% to 6%, property values were frozen more or less to the rate of the CPI per year. This means, your property can keep having its appraised value inflating for years, but your assessed value will only change per the CPI.
The catch, though, is once the property’s sold, the assessed value (less ratios and all that – for me it’s roughly 50%) will be applied to the current value of the house.
So, the warning is, your property taxes could be significantly higher thant the old owners’ property taxes. But, you’d be assured of never getting driven out of your neighborhood because your property increases in value too much. And in our case in Michigan, it means everybody pays taxes – not just property owners.