The ratio you ask about must be the result of dividing tax assessment by actual sales prices of similar houses in a recent period. 10 houses assessed for a total of 1,000,000 were sold at a total of 900,000. The ratio is 90%. It helps answer the question of how accurate is the tax assessment? And it is a suggested answer, knowing nothing else about a house, as to its approximate value. Change the estimate for better than average amenities and updates, or worse than average condition. Using the "whatever the seller and buyer agree on" as an answer misses the part of what an appraisal may be for loan purposes. Except for a cash buyer, the appraisal will be an important number, based on recent sales of simiiar and nearby. In this recession, lenders' underwriters are conservative based on appraisers being conservative. On top of that, buyers are conservative and sellers reluctant. But.... if you need a house, want a house and can buy a house, now is is great time because how low can the rates go? Under 3% for a 15 year mortgage loan is almost free money. Five years from now, many folks will be kicking themselves for not buying when they could have. But maybe they did not need a house, or want a house, or could not buy a house.... it is not easy to get a loan with less than stellar credit, at least at these super rates.
Carl Ben Witzig