When you are seriously considering making an offer on a house, it is likely you will look at the property tax records in an effort to determine the tax rate, schools and how much the property taxes will be. Another field on the property tax record is the property’s assessed value. This field causes a lot of confusion among home buyers, so we thought we’d clear that up.
What is Assessed Value?
The assessed value is what the appraisal district (the entity that you pay your property taxes to) thinks the property is worth, not what an appraiser thinks it is worth. Because Texas is a non-disclosure state (tax assessor should not have access to sold data), this number is a best guess of what they think your property is worth. Values are assessed once per year and are used to calculate the amount of property taxes due.
What is Appraised Value?
The appraised value of a property is what a residential appraiser thinks the property is worth on the day of the appraisal. This value is based on current market conditions, recent sales data and is used to justify the agreed upon contract price. A lender will lend a certain percentage of the contract price or the appraised value, whichever is less. A lender does not look at assessed value to determine value, only appraised value.
Why You Want Assessed Value as Low as Possible
You want you property’s assessed value to be as low as possible because that’s the value the tax assessor bases your taxes. Taxes are paid as a percentage of assessed value. The lower the assessed value, the less taxes you pay.
Why Pay More than Assessed Value for a Property?
In a strong real estate market like we are currently seeing in Austin, even with over 100 years of combined experience valuing commercial and residential property, often times list prices and ultimately contract prices are higher than assessed value, which is to be expected. Assessed value has no bearing on market value in most cases. When considering making an offer on a home, it is important to review local sold data and discuss neighborhood market conditions with your buyer’s agent. This is the best way to determine what to offer on a home.
How Do You Keep Your Assessed Value As Low as Possible?
Take advantage of tax exemptions. If you occupy the property as a primary residence, file a Homestead Exemption. A Homestead Exemption will reduce your homestead’s property taxes by about 20% and it will also limit the amount your property taxes can increase from year to year. This will keep your assessed value as low as possible. There are several other exemptions you might qualify for, so check with your local Tax Assessor’s Office to learn more. Assessed value too high? Try our post about How to Appeal Assessed Values.
Assessed Value vs Appraised Value
Bottom line, appraised value and assessed value are two completely unrelated numbers. When you’re considering making an offer on a property, work with an experienced buyer’s agent who can help you craft a market appropriate offer.
Considering Buying a Home in Austin?
We can help! With a combined 60+ years of experience specializing in buyers, we know how to help buyers evaluate real estate and get a good deal. Check out our Austin Home Buyer page to learn more about our team and how we work. Then, call us at (512) 827-8323, email us at info@11OaksRealty.com or fill out our Home Buyer Survey to schedule a no obligation consultation.
Is Your Tax Assessment Accurate? Find Out Instantly
Our Market Snapshot tool can help you estimate whether your tax assessment is accurate or not. Unlike most other online home value estimators that base their estimates on unreliable public records, our Market Snapshot tool bases the analysis on the same data Realtors use, making the value much more accurate. With more accurate data, you can determine whether or not it would make sense to protest your tax valuation. Simply fill out the form below and we’ll get the Market Snapshot for your home sent to you right away. Need a more detailed analysis? Try our Qualified Home Evaluation.