That's an estimate to enable business to go on based what the bank is willing to risk.

For the proposal to work you would need an estimate good to within less a percent. Or lawsuits galore.

So if I don't apply for a loan, I don't get assessed, which means I don't pay taxes? Anyway, the system is not that simple and bank assessment would be trivial to game. People do it now even without taxes on the line...

It's one of many things that can give you some idea what an asset is worth.

Ah yes banks. The people responsible for the 2008 crash.