Most assessments are produced by mass appraisal, and that explains most of what looks arbitrary about them. An assessing office responsible for tens of thousands of parcels does not inspect each one and form a professional opinion of its value. It builds a model from recorded sales, physical characteristics held in the property record card, such as square footage, lot size, year built, bathroom count and condition code, and neighborhood boundaries, and applies that model across the roll. The consequence is that an assessment can be wrong in a way that has nothing to do with judgment about your house: the record can say four bedrooms when there are three, or carry a finished basement that was never finished. Errors of that kind are the most productive thing an owner can look for, because they are factual and documented rather than a matter of opinion.
In many states the assessed value is deliberately a fraction of market value. The mechanism is an assessment ratio, sometimes called an assessment level or a classification percentage, applied to the assessor's estimate of market value to produce the assessed value. Where a ratio is in use, an assessment that looks far below what the house would sell for is not evidence of a bargain, and an assessment near the sale price may be evidence of an error. Some states apply different ratios to different classes of property, so that residential, commercial and agricultural parcels are taxed on different proportions of their value. None of this is federal, and no federal body sets ratios, cycles or caps. Every specific is state law, which is why a figure read on a national website is worth nothing until it is checked against the assessor's own published material.
The reassessment cycle is the other reason assessments drift from reality. Some jurisdictions revalue every parcel annually. Others do it on a multi-year cycle, with the years in between handled by a general adjustment factor or by nothing at all. A few reassess a property only when it changes hands or is substantially improved. Layered on top, many states cap how fast an assessed value may rise in a year for an owner-occupied home, and some freeze it entirely for qualifying older owners. Each of those devices does the same thing over time: it pulls the assessed value away from what the property would currently sell for, and it does so by an amount that depends on how long the present owner has been there.
That last effect is the source of the question every assessor's office hears, and the Supreme Court has answered it twice, in opposite directions. In Nordlinger v. Hahn, 505 U.S. 1 (1992), the Court upheld California's Proposition 13 against an equal protection challenge. The system reassesses property to current appraised value on new construction or a change in ownership, so a recent buyer can pay several times what a long-tenured neighbor pays on an identical house. That, the Court held, rationally furthers legitimate state interests in neighborhood continuity and stability and in protecting the reliance interests of an existing owner who, unlike a buyer, cannot decide not to buy if taxes rise. The vote was eight to one, with Justice Blackmun writing.
Three years earlier, in Allegheny Pittsburgh Coal Co. v. County Comm'n of Webster Cty., 488 U.S. 336 (1989), the Court struck down a West Virginia county's practice of valuing recently sold property at its purchase price while carrying comparable properties forward at stale figures with minor adjustments. Petitioners' property had been assessed at roughly eight to thirty-five times more than comparable neighboring property, and the disparity had persisted for more than ten years. Nordlinger explains why the two cases do not conflict: the "obvious and critical factual difference" was the absence of any indication that the policies underlying an acquisition value system could conceivably have been the county's purpose. West Virginia's own constitution and laws required property to be taxed uniformly according to estimated market value, and the county defended its practice as an attempt to assess at true current value. So a state may deliberately choose a system in which tenure decides the tax base. What it may not do is declare a market-value standard and then apply it unevenly.
The practical translation for an owner is short. A large gap between your assessment and a neighbor's on a similar house is not by itself a defect, and in a state with acquisition-value reassessment or a strong cap it is the system working as designed. A large gap between your assessment and what your own house would sell for, in a jurisdiction that says it assesses at market value and reassesses annually, is a different matter, and it is the shape of case an appeal is built on. The appeal itself, its evidence and its deadlines are covered on their own page.
