Property Tax Assessed Value vs. Fair Market Value
Hard as it might be to imagine, there’s actually one scenario where a home’s property tax value can be too low: when it’s about to go on the market.
While the assessed value isn’t something that Realtors and Appraisers take into account to determine market value — we/they rely solely on what are called Comp’s, or 
“Comparable Sold Properties” — prospective Buyers sometimes take a peek at it.
And, so do their agents.
Explanation(s)
The most common (and benign) explanation for a too-low valuation is that the homeowner bought decades ago, and the annual, incremental increases in the tax assessed value simply lagged market appreciation.
Decades later, that gap has grown to $50k — or $250k.
The not-so-benign explanation for the above: the owner has done a major addition or made other substantive changes that the tax authorities don’t know about.
Market 180°
Ironically, a couple years ago at the market bottom, many would-be home Sellers faced the exact opposite problem: an unrealistically high tax assessed value.
The usual scenario?
A long-time, now-aged owner who never updated their property — unbeknownst to the tax assessor, who hiked the assessed value every year in sympathy with their neighbors’.
P.S.: Once a home sells, the sales price presumptively establishes fair market value in most cases.
The exception: short sales and foreclosures, which are assumed not to be arm’s-length transactions.
