This week we debut a new column on Richmond.com: Ask the Agent. Like the name says, it's your chance to ask a local real estate agent any question you'd like. This week the subject is assessments. Questions can be emailed to Jennie Barrett Shaw at jennie@jenniebarrettshaw.com. Ask the Agent will appear the first Thursday of every month.

I live in Chesterfield County and recently received my assessment statement. As a relatively new homeowner, what does this mean? How will it affect my mortgage payment? Will protesting the new value really matter?
-- Anonymous

Just as sure as the sun will rise, real estate assessments will do the same. In January, many Richmond-area residents saw an increase in their tax assessments, which caused a bit of a stir – particularly since real estate sales saw a slight downturn last year. In 2007, while some U.S. cities saw a double-digit decrease in value, the Richmond market stayed relatively strong. That said, most homeowners did not see an increase in their home's value, but did see an increase in their tax bill.

Let's look at the background of real estate assessments and its purpose in the bigger picture of home ownership and sales.

Like any other tax, the tax on real estate is a vehicle for the government to raise money for schools, public safety and other critical government-sponsored programs. In Chesterfield County specifically, the income generated from real estate taxes was the largest revenue line-item (41 percent) in the county's $663.3 million budget in 2007. That's a whopping $273.5 million.

So when your tax assessment increases, does that mean that the value of your home has increased? The short answer is no. In the Richmond area, tax assessments are generally lower than the true market value of a home. It is not uncommon to see a home assessed at $325,000 and sell on the market for $400,000.

Although tax assessments are based on "fair market value," the assessed value differs from the appraised value. An appraisal is a more accurate valuation of a property, involving an interior review of the home, including a careful evaluation of upgrades and improvements. Most homeowners have never greeted a tax assessor to review the interior of their home.

For example, if you live in a neighborhood where most homes have renovated kitchens and baths, fresh paint and a finished third floor, and many of these homes have transferred in the last year, chances are good that your assessment will increase too – even if you're still sporting 1970s cabinetry and peeling wallpaper.

If this is the case, it would certainly be worth an appeal to the city or county for a decrease in your assessed value. The process can be laborious, but if it's going to save you a few hundred (or in some cases, a few thousand) dollars over the course of the year, it can be well worth it.

In terms of your mortgage payment, here's how it works. Your mortgage payment consists of principal, interest, taxes and insurance (known as PITI). These costs are added together to come up with the payment you send to your mortgage company every month. Your principal and interest will never change, unless you have an adjustable rate mortgage. But when the tax goes up, basically the bank has to collect more money from you each month. The same is true with your homeowner's insurance, so keep an eye on that too.

There are two ways you can handle the payment. If your annual taxes went up by $500, you can either pay $500 upfront and keep your mortgage payment the same, or you can add the increase to your payment over the course of the year. In this case, your payment would increase by $41.66 per month ($500 divided by 12 months in a year).

Most homeowners choose the latter, since it's a more gradual expenditure. However, if you happen to have that money in the bank today and are accustomed to your family's current working budget, paying it upfront will save you the trouble of reevaluating your monthly expenses.

If seeing your tax assessment this year has made you consider selling your home and taking advantage of the recent drop in interest rates, contact your real estate agent, and he or she will be able to give you a more accurate view of your home's value in the current market.

Jennie Barrett Shaw is a Realtor with Keller Williams Realty and a Richmond-area resident since 1987. She helps buyers and sellers maximize their investments in real estate by serving as a knowledgeable and ethical advisor. She currently lives in Westover Hills with her husband Travis, and their two yellow labs. Questions for Ask the Agent can be submitted to jennie@jenniebarrettshaw.com.