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asking price verse the tax apprasial

looking to buy a home and the asking price is 244k but thehomes tax appraisal came in at 201k. I havent see the banks appraisal yet but is this common?
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July 09 2009 - American Falls
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As mentioned below, the tax appraisal is used for tax purposes only. A drive by appraisal done every few years is adequate for the property tax calculations.

Mortgage lenders will do another appraisal which they plug into a formula to tell them how much they will loan against the property. This can be done by a bank on any sale (new construction or resale) and also when a homeowner wants to refinance. They have specific formulas that they are required to use and some appraisers are more accurate than others in estimating the home's true value.

Fair Market Value is what a ready, willing and able buyer will pay for the property today. This is what most people are asking when they want to know the value of their home. But this value fluctuates constantly. This value must also take into consideration intangible factors such as "buyer appeal." This is what homeowners request realtors to tell them.

The trick to selling your home quickly for the best possible price is to come as close to this number as possible. Objective data is used as part of this estimate but getting it right is an art.
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July 19 2009
Keep in mind that the tax assessor only needs to update their records via a "drive by" every seven years and they have not even gone inside their home.  I know in one community the same house can sell for $40,000 more based on upgrades so have your Realtor do a CMA (Computerized or Competitive Market Analysis) based on the actual features and conditions of the home!

I have been a Realtor for over 18 years and have never used the tax assessed value as any type of indicator at all because, yes, it is very common to have the actual value way off from the assessed value.

Great question though, I get it a lot!
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July 18 2009
Hi Perkstar:

The "tax appraisal" has nothing to do with the retail market price for a home. It is established by your local tax assessor  to determine what the real estate taxes should be for your home. There are many factors that go into the formula including square footage, amenities of each particular parcel and so on.

You should put more weight on the appraised value that your appraiser comes back with. In the appraisal you will see "comps" which are recent (within 6 months or less) sold properties within a pre determined radius (usually 1/2 mile from the subject property). Once you receive that, you can then make an educated decision of what the value of the home should be.

Also keep in mind, and this is what I tell my clients when I represent them, the "real true value" of any property is ultimately determined by what someone is willing to pay for the property. If the seller agrees to the offer, they agree that is what the property is worth.
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July 09 2009
 
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