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Question on re-appraising home

The previous owner of my home finished off the basement himself so the sq footage is close to 2000 and 4 bedrooms, but he left it with the original specs of 1000 sq feet and only 2 beds(and thats how Zillow lists it), presumably to keep his property taxes lower.

Now that I want to refi or move I figure I need to get it reappraised to get the value up so i'm not so underwater.  

I know my property taxes will probably go up, but is there any worse downside to that, as in can the county charge me the increased taxes for previous years?  If thats not a risk how do i get it reappraised, just contact the county?

Thanks.
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December 07 2010 - Savage
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Answers (6)

It would be best to talk to the assessor about your house to see what square footage is considered when establishing assessed value.  Asssessed value and market value are two differnt values.  If your additional square footage is below grade level it is not considered the same as above square footage.

Also you can talk to a local realtors in the area and get a idea of value.
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December 18 2010

Those who have answered before have offered some good advice.  From a property assessment standpoint I would:

1. Call the local assessor and ask, even anonymously, if correcting the property characteristics would affect the assessment.  As others have commented finished area in the basement does not contribute to overall value the way that above-grade living area does.  Some states allow the assessor to correct errors such as what you may have, but in practice they usually correct the assessment for the upcoming year and will consider that fact that you are the new owner.

2. To Dan's comments that "[t]he key is not your tax bill.  The key is salability," I would add that it is also about honesty.  The way the property tax works is based on everyone who has a taxable property paying their fair share.  The essential component required for spreading that fair share around is for all properties to reflect, as accurately as possible, what is true and correct.  Property owners who are trying to hide information from assessors are not causing any real harm to the assessor or taxing jurisdiction (they can raise the tax rate in most cases) but increasing the tax burden for all others who are being truthful about what their properties included.

Keep in mind that in these modern times appraisers, review appraisers, and auditors that exam lender records will (and do) compare assessment records to appraisals for original mortgages and refinancing  or loan modifications.  As an assessor I have been called many times to explain why assessment records differ from recent appraisals.

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December 18 2010
Appraisers define "Gross living Area" as living, heated space that is above grade so your square footage is the same as originally was. A basement (below grade) will be considered as contributory to value, based on it size, level of finished/completed rooms, level of functionality & utility. Monetary adjustments will be made to the comparables to account for dissimilarities but an appraisal will not change your assessed value/tax bill. 

Getting a home appraised for a Refi is done by an appraiser on behalf of the lender/bank, no re-evaluation from your local assessor or a change in the property "Characteristics" originally filed many moons ago takes place.

Building code/permit is another whole different set of issues. Honestly,don't have a quick answer to that ..But my advice will be for next time you buy a home ...make sure they can account for all improvements done with permits, and show that everything is up to code .. hire a local home inspector who can provide some guidance. 
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December 08 2010
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The key is not your tax bill. The key is saleability.

When I go to buy a house I will check on the permits. If something is not permitted I could be forced to remove it completely at my cost. Since I do NOT want to pay for someone else's mistake I will make sure at the town office that everything is alright. If it is not the seller will have to fix all problems before I buy.

If it is legal to finish off your basement in your area without permits (or it was done with permits) this is not a concern. If it is not legal it is a liability better taken care of by you now before a buyer sees it as a problem.

IF you are looking at an unpermitted problem you could face fines, have to remove the work done, or maybe just have them sign off on it. It is up to them not you. If you ask them nicely about why your house does not include the finished basement (that you bought the house with) on the tax bill they may be easy to deal with.

When the town looks at your addition they could insist that it be upgraded to 2010 standards. If you wait 10 years they could demand it be brought up to 2020 code. The town has no way to know how old this is so they would assume it is new.
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December 07 2010
Zillow gets their data from public records. If Zillow shows 1000 sq ft, so does your county assessor or whatever you have there in Savage.

Below ground basements are typically not counted as living area, though they may be finished and people live there. Even so, they are valued by potential buyers in the market even if not permitted or permittable.

I would check with a local Realtor or appraiser and find out if your finished basements is 'permittable' or not. If so, I would officially permit it before I sold it, your home will garner more value.

As yes, your taxes will not go up if you get an appraisal.

To contact a local Realtor, just look at local for sale signs. Or contact an appraiser, and ask for FREE advice, Im sure they will advise you for free....here is a link to find a local appraiser.
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December 07 2010

Getting a home appraised for refinancing is done by an appraiser that works with the bank.  This is different than an assessor from the county who does an appraisal for tax value.  Therefore, having your home refinanced is unlikely to trigger any change in your county assessed value or your property taxes.

Also, if you move you can list the home with the correct square footage.  There would be no reason to get it reappraised before selling as this plays no role in the market value of your home.  The home will sell at a market value of the 2000 square foot home as that's how it will be listed in MLS and that's how potential buyers will value it.

Hope that helped,

Bill Wallace, RE/MAX Results - Apple Valley

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December 07 2010
 
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