What’s the difference between Assessed Value and Appraised Value of a property in California?
What a great question! I have read articles and visited web sites that constantly interchange these two items, often to erroneous results. The short answer is really easy. Assessed Value is the value your property taxes are based on and Appraised Value is the value of your property on the day and time the appraisal was performed.
In California, Assessed Value is most affected by Proposition 13 that was passed in 1978. This proposition basically did two things. It created a cap of assessed value increase per year at 2 percent and capped property tax at no greater then 1 percent of the assessed value. You may pay slightly over 1 percent of the assessed value of your property due to bonds and fees approved by the voters. If you purchase a property, the purchase price is typically used as the basis for the initial Assessed Value. If during the first year property values go up 6 percent the Assessed Value will only be increased by the cap of 2 percent. What this means is that as more years go by after purchase, the difference between the Assessed Value and the Appraised Value will broaden. Only through a purchase by a new owner or a significant improvement of the property can the Assessed Value be raised to equal the Appraised Value. In general Assessed Values cannot be over the Appraised Value. If you believe this is the case you can contact your tax assessor and ask them to review your Assessed Value. If you are correct, the tax assessor will often lower your Assessed Value and, consequently, your tax bill.
Appraised Value is the value of your property at a specific date and time as figured by a California Licensed Appraiser. This value is often used by finance companies to determine the value of a property they are issuing a loan on. Many different methods are used to appraise a property. They may use a replacement method, a best use value method, a comparative market analysis or any one of a number of other methods depending on what will work best with a specific property.
An AFG Real Estate Agent can perform a comparative market analysis on your residential property. The result of this analysis should be very similar to an actual appraisal and should be the very start of pricing your home for sale or to find out if an offer you are making on a home purchase is over or under market value.
Stephen Armstrong
AFG Realty
Broker
