assessed value vs actual value - Many home owners are not sure what there current homes actual value may be. Many see the assessed value on their property tax bill and wonder why it is so low. The one true way to find out what your house is worth is to hire an appraiser. The appraisal will give you the actual value to compare to the assessed value.

With the assessed value of your home usually being lower than the market value of your home, this is a good thing. Your home's property taxes are based off of the assessed value of your home and not the market value. Therefore, by having your taxes calculated off of the assessed value this will help most homeowners to benefit from cheaper property taxes. Some very commmon questions from consumers are:
"Will my taxes go up if my house appraises for more money?"
"If I refinance my home for more money than I bought it for will my property taxes increase?"
"Will the lender provide a copy of the appraisal to my county auditor?"
"Will the auditor be able to find out how much my house appraised for?"
The simple answer to all of the above questions is no. Your county auditor will not reassess your property taxes based on how much you owe on your mortgage or how much your house appraises for. Most county auditor departments do their own property value assessment and this is how they come up with the value of your property. The auditor will never see a copy of your home's appraisal when you refinance and your lender will never provide the county auditor a copy of the appraisal report either. Therefore, the assessed value of your home is what is used to determine your property taxes and the market value/actual value is how much your home is worth on paper and could possibly sell for.

An appraiser will dertermine what is called the "market value" of your home. It is not only what your home is worth, but what an average buyer would be willing to pay for it in your real estate market.

Assessed Value vs. Market Value - Assessed value is the valuation placed on property by a public tax assessor for purposes of taxation. It is not the same as Fair Market Value. Fair Market Value is the agreed upon price between a willing and informed buyer and a willing and informed seller under usual and ordinary circumstances. It is the highest price estimated in terms of money which the property will bring if exposed for sale on the open market with reasonable time allowed to find a purchaser who is buying with full knowledge of all the uses and purposes to which the property is best adapted and for which it can be legally used.

In California, the tax collector may not change the assessed value of a residential property until the property is transferred. This is a protection known as Proposition 13 protection, named for a public referendum that initiated the law. However, if the market value should fall below the assessed value the homeowner may petition the tax collector to lower the assessed value.

Petitioning the value is really a simple process. There is usually a certain time during the year where the appraisal district will hear your petition and render a decision.

Homeowners like when their homes' "market values" steadily increase every year, because it helps to raise their net worth. These same homeowners dread when the "assessed values" of their homes also increase, which most likely translates into higher property taxes.

The county determines your assessed value and an appraiser determines your market value.

It is also good to know what percent of valuation your city or town uses to determine tax rate. You can find this out by looking at your tax bill or contacting your town or city assessors office.

Depending on what state you live in your assessed value can change when you do home improvements. When you get permitted they re-assess your home.

The assessed value is nearly always out of date by the time you get it. Each state has different laws determing what date the estimate of value is to be determined for.

A realtor will tell you the Fair Market Value is the highest price agreed upon. Most underwriters and appraisers define it as the most likely price to be agreed upon. That's why underwriters insist upon several comparables in the appraisal report, and don't usually just go by the sale price.

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