I have another question about real estate

The county appraisal on this house we found is $34000.
How come the house has to be appraised for a loan and why is that appraisal different from the county appraisal?

I don't understand this because I thought the purpose of property tax was to pay taxes on the value of your property. So if they don't use the county appraisal when looking at the value of a house for loan, then how can the value of a house ever really be determined?

I don't get it at all.
Enlighten me please!

You will appreciate the difference when your property tax bill comes in.

I don't understand why they have to be different.

I mean, isn't the value of your house its value - it shouldn't be subjective...

For resale value, you need to have the private appraisal done. But for estate matters and things like that, the assessed value is fine (that I happen to know because I am currently trying to settle my late husband's estate, and we owned two pieces of property together).

It is what they base property taxes on, and if they keep it low, people don't bitch or try to contest it. If people complain, they generally know the assessor will do a REAL appraisal, and it will end up being higher and they will pay more tax.

My house appraises ar 210,000. Country appraisal is around 130,000.


Edited to add more comments.

You see an appraiser enters the home, checks it for rot, termites, home improvements, etc. He/she then values it based on comparable sales w/ in the near vicinity in the last six months.

The assessor barely leaves his desk. He drives to see if the property in fact exists and then takes the value based on house and lot size to the houses previously assessed in the last year and then compensating for average equity growth for the area and age of the structure.

Lenders won't take the assessment because it isn't a true representation of the value of the home.

hope this helps

County and township property tax home valuations usually understate property value (because property taxes are unpopular). They do not normally enter your house and check its condition, but do a cursory drive-by check to determine value.

A loan appraisal is used to convince the lender the house is actually worth the amount being loaned. The appraiser does a thourorgh check on the overall condition of the house and lot, and takes into account a host of other factors to determine value. It is much more detailed than the tax assessment.

Hope this explains things for you. good luck in your new house! :)

1. Tax appraisals: The method of assessing "value" for tax purposes varies WIDELY from county to county, but generally speaking the tax appraisal figure is almost always lower than the actual value. A so-called "fee appraisal" (because you pay for it) is the best estimate of what a willing buyer would pay a willing seller not under duress. i.e. not a "fire" sale due to circumstances that would cause a seller to sell cheaply.

Example: The county tax appraised value on our house was $75,000. We paid $225,000 and I think we got a deal at that price.

2. I noticed in the other thread you asked about getting a home inspection. This is a fairly recent inovation. I've bought and sold houses for decades with no home inspection. The relatively recent disclosure laws for sellers give now give you recourse if you find major (hidden) defects. Since your husband is a carpenter, and you have friends who are plumbers and electricians, I'd think they could give the place a good going over. I believe that in your case a home inspection would be a needless expense.

3. 6% sounds "pretty good", but I'd go online and see what kind of deals you can get. I did my last three mortgages online and am happy with the results.

Is this your first home purchase?

I feel naive because of the lack of experience with home buying.

And it is sure a learning experience.
I was just as much of a neophyte my first time as you are now.
I remember walking out of the closing thinking "Jesus Christ, I've just signed my entire life away."

Since then I've "signed my life away" a half dozen times and learned more and more about how it works.

Don't lose any sleep about it. Your mortgage company is MUCH more worried than you are. They will make damned sure all the "t"s are crossed and all the "i"s dotted.

First, ignore the county appraisal. Each county/state has laws that tell them how to value the property. Most are wrong. You have to pay the taxes on the appraisal but you need a better value of the property.

The value of the home is based on location, structure, and buyers. You can't determine that. You need professionals to look at the market and help you determine the value of the attributes you value. Give me some comparable properties that sold and then you can determine the value. It's all about what the sales are.

Sometimes the appraised value, according to the County Prop. Appraiser is reduced due to homestead, etc.

The county thinks it's value is $34,000. The owner wants over $70,000. I may have misunderstood but I don't think so. The numbers don't match. You need to make the current owners prove the value of the property.

The city or town assessment almost never matches the appraisal. Some towns assess below market value and have a higher tax rate, some assess at or close to market value and have a lower tax rate and some like my town assess at market value AND have a high tax rate.

The appraisers job is to give an opinion of market value...the appeal of that house to the market. The appraiser's job is to compare the subject house with at least 3 other comparable properties in the neighborhood, they should match as closely as possible in style, size and amenities. The appraisal should determine market value for your house, if you use a solid mortgage company, their underwriters will go over the appraisal and make sure it satisfies Fannie Mae guidelines. That appraisal should give you a good picture of market value on your home.

It depends on where you live--the property tax code differs from state to state (and even within states.)

In Illinois we place assessed value (for purposes of taxation) at one third of estimated market value. If your house is estimated to be worth $120,000 that would give you an assessed value of $40,000. Any exemptions are taken off that amount, THEN taxes are calculated. Here in Illinois the owner occupied exemption is worth $5000, so that would place the taxing value for that $120,000 house at $35,000.

Here in Illinois we use a system called "mass appraisal" for taxation purposes. MASS anything is bound to have some inaccuracies, and real estate appraisal is WAY more exacting that assessment ever will be. It does happen that places are undervalued, either deliberately or accidentally, and that is one of the major reasons that banks will not accept a property tax value as a valid appraisal.

Something else that comes into play with assessments, is the fact that not every property gets revalued every year. I have ares in my county where I know that local assessor has not revalued for at least ten years. Trust me, it is really east to get behind (or beneath) the market values if you don't revalue with some regularity.

You might want to call your local tax assessor and ask what the taxing values really represent. You may be shocked to learn that the local tax laws are like those here in Illinois--that the 30 some thousand they quoted you only represents a part of what they think the house is worth. Be sure to ask what that number you got represent and are there any exemptions...

Just two cents from somebody who is both a taxing official AND a real estate appraiser.

Good luck!



Laura