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What is Assessed Value? How Does It Differ From Market or Appraised Value?

The assessed value is the value placed on a property by a government assessor for the purpose of calculating property taxes. Learns some of the challenges impacting it.

April 20, 2023

Assessed Value

Assessed Value

The Assessor’s office for each county in the United States determines an assessed value for all property in the county including apartment complexes. It is used by local and state governments as a way to allocate tax collection to meet their needs for government operations such as public schools, etc. The value loosely corresponds with market value but in many cases, it is under or overstated.

When an apartment investor buys or sells a property, it triggers the Assessor to reassess its assessed value. If the assessed value at the time of sale is less than the purchase price the Buyer can expect their assessed value to go up and the property taxes to rise.

Many people are unclear about the difference between assessed value, fair market value, and appraised value. Let’s take a look at the difference between assessed value vs appraised value.

What is Assessed Value?

Your apartment complex’s assessed value is the dollar value assigned to the apartment for property tax purposes, also known as ad valorem tax. The County Assessor does not have the staff to visit every property each year and do a full-blown appraisal. They use the same appraisal principles and concepts as an appraiser due to a property-specific appraisal but on a much broader simplistic level. The only time government assessors do a concise analysis is when someone contests their assessed value.

While apartment investors always want their property valuation to be high, when it comes to assessed value, they want it to be low to minimize their tax obligation.

What is Appraised Value?

The appraised value for a property is what a certified appraiser determines the value of a property to be using generally accepted valuation methods. The main accepted methods are the cost approach, income approach, and market comparison approach.

The appraiser for each of these methods does a detailed inspection of the subject property and then gathers market-applicable data, and applies their findings to the most appropriate approach for the type of property in question.

How Does the Assessed Value Differ From the Appraised Value?

The certified appraiser and the government assessor use the same appraisal methods. The difference between them is the level of detail and scrutiny put into the exercise. The certified appraiser does a much more thorough analysis of the subject property whereas the government assessor just does a simplistic high-level assessment.

Every property is unique, these unique factors are generally captured by the certified appraiser and missed by the government assessor. This is what leads to variance between assessed value and appraised value.

How to Challenge Your Property-Assessed Value?

If you think that the assessed value of a property is not accurate, you can take steps to challenge the result.

1. File a dispute
2. Have an actual appraisal done by a certified appraiser and submit to the County Assessor
3. Enter mediation with the Assessor to see if you can agree on a new value
4. If you cannot agree go to the board of arbitration which will review the dispute and make a final determination

Assessed Value: Conclusion

The assessed value of an apartment complex plays a considerable role in determining property taxes. It is recommended that property owners pay attention to their assessed value and if they think it is too high file a dispute.

Having the right property management firm can go a long way in supporting an assessed value dispute. At Summerfield Property Management, we offer full service for multifamily residential buildings that are 75 units or larger. If you are considering hiring a new firm, we would like to talk. Connect with us today!

Assessed Value: FAQs

Q: Is a property’s assessed value the same as its appraised value?

A: No, it is not, it generally varies due to the lack of the County Assessor’s ability to do a thorough valuation for every property in the county as is done when determining appraised value.

Q: Which state in the USA has the highest property tax?

A: New Jersey has the highest annual property tax in the USA, followed by Illinois and New Hampshire.

Q: Who determines assessed value?

A: Each County in the United States generally has a County Assessor office whose appraisal team calculates the assessed value for all properties in the County.