The County (or any local government) assessments are just that – assessments not appraisals.

Other than a timing issue (assessments are done once a year) that’s purely semantics because from a dictionary definition standpoint there is very little difference between assessment and appraisal.

From a motive standpoint they are also aligned.

Tax Assessors want to appraise houses at a high enough valuation based on current market conditions in order to collect the required taxes the county needs from the property owner. They will often use the rising bubble to their advantage to raise valuations in order to capture more tax revenue. They are slower to adjust valuations downward but there is more political pressure to get them to do so in market conditions like we are facing now.

Appraisals are done on houses to justify loans to make lenders willing to make the loan. Appraisers will also use the rising bubble to justify higher house prices, but in a falling market or illiquid market you will find many of them scrambling to hold on to pricing from a year ago to help the seller/buyer make the deal. Unfortunately right now most banks are not convinced by appraisals without very recent comps. Since there are not a lot of deals getting done this leads to a downward spiral and a deterioration of house values.

In the end it is all about what you believe. As I said before assessments aren’t the only thing to value a house, but people are paying attention to them.

Sellers are going to need a REALLY GOOD justification on having their houses listed above assessed values if they expect the buyers let alone the banks to fund them.

In the comments section of one of the bubble posts, you gave a link to mls data which had info on each house sold. That would be useful info as well. (See comment #5 of this post: http://realcville.blogspot.com/2009/03/charlottesville-real-estate-market.html )

Would be very curious to know how many buyers are first timers…and how many are “trading up”, if you have access to that data…or even if it’s anecdotal.

It doesn’t mean that the appraisers value is accurate, but it shows that buyers are paying close attention to it.

It’s important to understand what buyers are paying attention to, and it’s equally if not more important to understand what’s accurate and what’s not.

I haven’t had time yet to read your full post, but I want to point out one important point of clarification:

The County (or any local government) assessments are just that – assessments not appraisals.

This is not mere semantics, but a a crucial distinction.

I liked your article, but there wasn’t enough detail in there for me to determine how far off the assessments were.

I put together an article regarding the assessments for Albemarle county based upon first quarter 2009 sales.

My regression model shows that the sales price for properties under $1 million is:

Sales Price = -$6,650 + 1.007 * Appraisal

It doesn’t mean that the appraisers value is accurate, but it shows that buyers are paying close attention to it.

For more details you can check it out at:

http://worthmoreorless.blogspot.com/2009/04/how-accurate-are-2009-albemarle-county.html

Thanks!

Scott

I know there are many other factors when comparing a sales, but this one I used most heavily when I was last a buyer and one I will turn to when considering a sale.