Calculating Retail Value from the Tax Assessment

Usually the tax assessment is lower than the retail value. Is there a way you can calculate retail value using the tax assesment value?

I was just wondering. I know tax assessment are calculated once a year and retail value changes every day. I thought around the end of the end when the assessments get updated there would be easier to calculate retail value on a house,

You’ll never find a single formula that works well in all markets. At best you might be able to figure out a quick and dirty way to guesstimate in your local market but even that I would say you would be better off using Zillow, that’s probably less of a guess and that’s not great.

Rich is correct. Each municipality has different requirements when they are assessing property value. Some attempt to assess at full market value, others specifically target a percent of market value. And realize that county property appraisers have thousands of parcels they must assess each year so there is no way they’re hitting the bullseye.

Plus another thing to take into consideration is that the values they give don’t take anything into account inside the house such as condition, upgrades, etc. 2 houses might get a similar assessment but one might have marble floors and the other might have dirt floors, how would the assessor know otherwise?

This subject has been debated several times but THERE IS NO DEBATE!

Tax assessment appraisals rarely have any basis in reality – they are only used to create a tax basis for a given municipality!

The appraisal ‘bubba’ was out by our new house the other day…it is the first house in a brand new development – my wife happened to see him and went out to ask him what he was up to. Almost every point in his database printout was inaccurate (and, shockingly enough, all in the city’s favor!)…wrong number of bedrooms, wrong number of baths, wrong square footage, they even spelled the street name wrong…


“Tax assessment appraisals rarely have any basis in reality – they are only used to create a tax basis for a given municipality!”

Tax appraisals are LAGGING indicators of previous sale prices of that general type home in that general area. Not perfect, but often better than other sources.

If a house sells for $100 K and others of similar form in same geo also sell at near that price - then that will become the Tax Appraised Value on tax records.

It is important to review the past few years of changes that are based upon selling prices and not tax pro-rata increases.

Jess McLean

Not everywhere…in some places they set a number that the homeowner won’t/can’t dispute (disputes are time-consuming and expensive) and then they just adjust the millage rate to garner the income that they need to run the municipality…often this only happens every 5 years or so.


Tax assessments are a joke. Use them as the basis for valuation at your own peril.

You can not say that “houses typically sell for 1.X times the assessed value” because the assessed value can be very different for identical houses.

The key to success in this business is being very accurate with your numbers, and using the assessed value as any part of your thought process will only lead to less accurate results.

Tax assessments here are no where near the market value of a home. The deal I’m working on now, FMV is about $430 and the property is valued at $25K on the tax rolls.

This is what I’ve been trying to say all along but I keep getting push-back from folks that are insistent that they can do some sort of mathematical calculations and arrive at an accurate figure.

Here’s what it boils down to in my mind: You cannot sit at your command central (desk), log onto a site, plug that number into a spreadsheet and get an accurate comp!


In Harris County Texas you can always protest your appraised value. I do it regularly on all my properties. I can tell you for a fact that I can sell my houses for at least 10% more than the appraised value and in the case of my primary residence it is about 30% lower. The tax appraisal and the actual value of the house have no connection at all.

Perhaps I should have stated that I live in Dallas County, Texas.

The tax appraisals are as I indicated in the Dallas County, they may be different where others live - but, in fact here, they are good refernce data.

I suppose each Taxing authority has different methods - but ours are useful due to the RE folks, buyers, traders, fixer uppers etc.

We have rights of producing comps, appeals, protest rights, hearings, etc to argue the and possibly change the values. I’ve done it and had them changed based upong factual data.

They are a very good tool.

Jess McLean

Doesn’t matter where you are…tax assessments have no direct correlation to value/reality. Assessments are rarely current – the only valid way to judge value is a comp or an appraisal. If tax assessments were valid, lending institutions would use them in lieu of an appraisal.