Profile picture for thomask387956

Are there negative impacts on adjusting the assessed property value?

I am concerned about the implications of the
lowering of the assessed property value.
Does anyone have any experience with this process and how it could
affect the "true" value of a home in case of a sale?
E.g. does an appraiser take this into account, and is it even
published?

The process seems somewhat involved based on the SF gov website
information.
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September 04 2009 - Castro-Upper Market
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Answers (4)

Best Answer
You raise an interesting question. There are definitely benefits of adjusting the assessed value to lower your property tax if you believe your home has declined in value (see below about the appeal process), but here are a couple of points about the sales value and appraisal process.  - Sales Price: Most homes are priced based on recent comparable sales. Recent means within the last few months. Since it is unlikely for reassessments to occur within a few months of any sale, I doubt this would affect the amount offered. Keep in mind that the price a buyer is willing to offer is usually determined by supply (inventory) and demand (buyers). Regardless of the actual value, buyers will tend to offer less if they feel the home has lingered on the market. Likewise, buyers will tend to overbid for a property that has received multiple offers.  Most buyers will take the advice of their real estate professional who knows the true value of every block in their local area and they would be looking at the recent sales activity, not reassessments of older sales. So even if sites like Zillow or Trulia show lower values, I do not believe this would have a material negative effect. It is always dangerous to generalize because every home is unique and even in buyers' market, properties can still sell over the asking price. I track Pacific Heights 94115 and in Jan-June 2009, 29% of three-bedroom homes sold over their asking price (22% of four-bedrooms sold over their asking price)!  - Appraised Value: The appraisal is extremely important because a low appraisal affects the loan amount. In my experience with residential property, appraisers are using the most recent sales prices from the MLS, usually within the past 3 months.  Appraisers typically check county records to verify MLS data and check for prior sales of subject property (past 36 months) or comparable properties (past 12 months). So I do not believe lower values shown on Zillow or Trulia would negatively affect your appraisal. Here is some information on the two appeal approaches that may be of help if you are eligible for a reduction in your property taxes for declining values on SFR, condos, lofts, co-ops.  - Informal appeals through the Assessor's office for the 2009-10 were being accepted through August 28, 2009. These reviews are free and simple - owners just complete a one-page form found on the Assessor's website www.SFGov.org/assessor. One way to strengthen your case may be to provide comparable sales that support your request (a realtor who has MLS access can easily provide you a nice excel spreadsheet of comparable sales values, which is usually used to determine a home's fair market value).   - Formal appeals through the Assessment Appeals Board are being accepted through September 15 on www.SFGov.org/assessment for multi-unit and commercial properties (SFR, condos, lofts, co-ops can also use this process). These appeals are more involved, require a $30 fee and requests are usually supported with evidence such as: comparable sales of similar properties, replacement cost less depreciation valuation, or income valuation.  What are your chances of being granted a reduction? The Assessor's office received 2,500 requests in 2008 – about half were granted a reduction.   The office stated that "homeowners who purchased their homes prior to 2004 are less likely to qualify for a reassessment because in most cases the property tax value is still well below the actual market value." Earlier this year, the City announced they were doing an analysis to see whether certain areas of the city warranted automatic reductions (this was also done in 2008 and they determined automated reductions were not necessary).  State Law (Proposition 13) limits the assessor's ability to reassess a property. Real Property can only be reassessed when a change of ownership or new construction has occurred.   Otherwise, the property tax rate is about 1% (it may include special assessments or bonds), and it cannot be increased by more than 2%/year (based on California's Consumer Price Index). Note that property transfers between husbands and wives or domestic partners (death, divorce) do not require reassessment. There are also exclusions for refinancing and parent/child transfers. IMPORTANT: an appeal will not relieve you from your obligation to pay your property taxes! Good luck!
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September 04 2009
The positives far outweigh any negative. Potential buyers would prefer to pay less taxes. An informed buyer will know the sales comps for your property when you decide to sell. best of luck 
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September 04 2009
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Appraisers sometimes do look at the assessed value, but they also understand that an appraisal is based on fresh information and comps not just old records info and trends is much more accurate. The biggest changes you can expect from a lower assessed property value are potentially lower taxes, potentially slower rising asessments and a potentially lower Zestimate on this and other automated valuation sites.

I appealed my assessed value and my Zestimate dropped to reflect the change. It has increased with the market over time, but is still not as high as it was when the 100K overassessed value was included. In SF, taxes are high and are capped for increases by Prop 13 so I would think that a lower assessment would be a benefit. A low assessment or recently appealed value can sometimes be a selling feature in markets with high taxes. However, you should consider any impending plans to refinace, get a home equity loan, use an existing home equity loan or sell using Zillow before you appeal since your AVM here and on other sites is likely to drop some if you are successful with your appeal. 
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September 04 2009
Hi Thomas,

Appraisers in a residential resale will use the sales comparison method to value your home.  In doing so, they'll look at comparable sales in the area and make adjustments for various amenities et cetera and arrive at a comparable value for your home.  The tax assessed value should not factor into an appraiser's valuation.  The tax assessed value is a matter of record and can be acquired easily, but it doesn't affect your mortgage or the appraised value.

I hope this helps.

Jason
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September 04 2009
 
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Are there negative impacts on adjusting the assessed property value?
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