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Another House Thread fair value versus tax assessment value
Old 09-30-2012, 04:55 PM   #1
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Another House Thread fair value versus tax assessment value

My husband and I found a house we like a lot. O.K. we both love it. Real Estate agents really put the pressure on and probably were successful because we had been looking for 2 days and this house looked like a jewel inside. No wear and tear from renters, great outdoor living space, right on the sound with a protective marsh and lagoon in front, great crabbing, fishing and beautiful sunsets.
We put a full price cash offer in because another couple was looking at it and making an offer too. List price was only $20K below current tax assessment. List price is $629K. Seller accepted our offer. We are now in the Due Diligence period. We can cancel any time during this Due Diligence for no reason. Due Diligence runs out October 15th. Am waiting for the appraisal but since we have been looking in this area off and on the last two summers we have a good idea of where houses were selling. Most were selling for 30% below current tax assessment.
Here's the deal about the current assessment. This area has not gone thru a physical re assessment of property since 2005 so all tax assessments are at the high of the market. This is why most are selling for 30% below.
I called the county assessor's office and spoke with the appraiser doing the appraisals for this area. He told me come Jan1, 2013 if no other property closes, the current owners will be getting a tax assessment notice for $200,000 below the current which in fact is 30% + below the current.

Have also talked to a builder that is building a house for someone 3 lots down. House will actually be 500 square feet less than the one we have the contract on. He told me the price to this owner will be in the low $300K range, not including the lot. This puts this new house including the lot in the $450K range..and right at the new assessment of the house we are looking at.

Have printed out for myself all sales for 2012 and 2011 in this area and in fact can find not one property that sold at current assessment. Most were 30% to 50% below.

First Question:
In a resort area how much weight do you give to tax assessments? I keep hearing,(from the realtors of course) that what people are selling for and buying for has nothing to do with tax assessments. Yet the appraiser I spoke with told me while they do a "mass appraisal", they fine tune it to look specifically for houses with the same or similar characteristics such as "sound front, 2700 square feet, 1/2 acre...etc. ).

I am going to try to renegotiate price based on the appraisal and if I actually agree with the comps used. But the seller is not likely to sell. At which point in time we probably walk away.
Let the seller get the new low $450K assessment value come Jan 1 instead of us. Right

Second question:
Who would you believe? The county appraiser who when I told him what we offered said, "Whew...you are paying too much"! or the real estate agents trying to soft pedal this and convince me that people are buying because they love a place regardless of price. Further stating "Someone will pay full price for it".

I think my husband and I need to cancel this contract before Due Diligence, let 3 months pass, let all those new assessments get into owners hands at 30% down from where they are....and then go look again...unless of course the sellers are willing to go there now.

All comments appreciated!
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Old 09-30-2012, 05:13 PM   #2
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Originally Posted by sheehs1 View Post
Have printed out for myself all sales for 2012 and 2011 in this area and in fact can find not one property that sold at current assessment.
Forget the relationship to assessed value, what did they sell for compared to the square footage, lot size, etc. of the house you have under contract?

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Originally Posted by sheehs1 View Post
I think my husband and I need to cancel this contract...
+1

What I'm reading is you are concerned you're paying way too much for a house you've fallen in love with - and that appears to be the case. Sounds like the RE agents smell blood in the water and moved in for the kill. Get out while you can.
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Old 09-30-2012, 05:13 PM   #3
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As I understand it, you have hired an appraiser. See what they say and then make your decision.
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Old 09-30-2012, 05:24 PM   #4
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Originally Posted by sheehs1 View Post
Second question:
Who would you believe? The county appraiser who when I told him what we offered said, "Whew...you are paying too much"! or the real estate agents trying to soft pedal this and convince me that people are buying because they love a place regardless of price. Further stating "Someone will pay full price for it". <>

All comments appreciated!
My comments. Just like that annuity salesman is not your friend, that insurance adjuster with the reassuring TV ad is not your friend, a stock broker is not your friend although he will really try to seem so, your realtor also is not your friend. If there were any good way to hedge against big real estate price upmoves, I would never buy a house. It is someone who rarely plays, playing high stakes poker with some real sharks.

If you were the tax assessor, and your county or municipal budget were crying out for more money (partly to pay your own benefits and salary and retirement), would you not slap on the highest assessment that you believe will stick often enough that it will not attract constant complaints and appeals and perhaps problems for you?

Ha
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Old 09-30-2012, 05:37 PM   #5
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Originally Posted by rewahoo View Post
forget the relationship to assessed value, what did they sell for compared to the square footage, lot size, etc. Of the house you have under contract?
+1
Quote:
what i'm reading is you are concerned you're paying way too much for a house you've fallen in love with - and that appears to be the case. Sounds like the re agents smell blood in the water and moved in for the kill. Get out while you can.
+1

The critical thing here is to find out current market value and make sure you are not paying more.
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Old 09-30-2012, 05:56 PM   #6
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Originally Posted by REWahoo View Post
Forget the relationship to assessed value, what did they sell for compared to the square footage, lot size, etc. of the house you have under contract?


+1

What I'm reading is you are concerned you're paying way too much for a house you've fallen in love with - and that appears to be the case. Sounds like the RE agents smell blood in the water and moved in for the kill. Get out while you can.
Believe it or not I have that research but have to go back and re-gather some of it.
Based on the new house going up on the lot 2 lots from us at 2,200 square feet, that new owner is probably going to pay $204 to 210 square foot including lot. Hasn't closed yet so is not formally on the books.
Our contracted price? $230/per square foot.
Another that is not sound front but is 2 blocks from ocean sold for $203 per square foot.
One that did close this year sound front sold for $186 per sq feet. Need a lot of work.

Back in 2010 friends of our bought a 2,200 square foot house in gated boating community with lots of amenities. They paid $270 per square foot for a postage stamp.

Sales in this area are all over the board and seems to be based on how educated the buyer is and how willing the seller is to sell.

County website is awesome. I can print off all sales for any time period for any year, search by buyer, seller...etc.
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Old 09-30-2012, 05:57 PM   #7
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haha +

See Zillow for relative values and assessment history of area homes. Even?, fair?, mixed?.
Also... figure the total cost for the maximum, minimum taxes over the period you expect to own the property.

Saying that, reminds me of the property we didn't buy on Martha's Vineyard in 1967, for $30,000, that just sold for $1,800,000. As they say, "repent in leisure..."

Good luck!
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Old 09-30-2012, 05:59 PM   #8
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As I understand it, you have hired an appraiser. See what they say and then make your decision.
Should have this week brewer and I agree. Will be interesting to see which comps he uses. Have had 2 good conversations with him, so he knows I'm looking for a fair and reasonable assessment. We'll see. It's an independent appraisal. I'm paying him. No bank involved. So when he told me they "normally" discuss it with the real estate agents and what did I want him to do. I told him I wanted him to call me and discuss first..before getting any real estate agents involved in my appraisal. That said...whether he does so or not...who knows.
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Old 09-30-2012, 06:05 PM   #9
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My comments. Just like that annuity salesman is not your friend, that insurance adjuster with the reassuring TV ad is not your friend, a stock broker is not your friend although he will really try to seem so, your realtor also is not your friend. If there were any good way to hedge against big real estate price upmoves, I would never buy a house. It is someone who rarely plays, playing high stakes poker with some real sharks.

If you were the tax assessor, and your county or municipal budget were crying out for more money (partly to pay your own benefits and salary and retirement), would you not slap on the highest assessment that you believe will stick often enough that it will not attract constant complaints and appeals and perhaps problems for you?

Ha
Taxes won't go down . They will just up the rate. Oddly enough, it is the tax assessor who is lowering the values....but they have not been lowered since 2005. Everyone will take a big hit to their assessed value come Jan 1. Shock factor on paper probably will mean more to homeowners then.
Just don't know how logical it is to buy $200K higher than what I know the tax assessment will be come Jan 1. Probably best to wait until then.

We love the house. Real estate agents are banking on that. Should have seen the manipulations to get me to put a full price cash offer on. But I knew I could get out of it...if my research didn't pan out. I do my homework ...and the last 2 to 3 years...have not bought anything yet.....

What the county website tells me regarding closed sales does not foot with what the agents are saying.
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Old 09-30-2012, 06:07 PM   #10
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+1

+1

The critical thing here is to find out current market value and make sure you are not paying more.
I agree and I think I am paying too much...but will wait for the appraisal. Then I'll determine if the appraisal seems fair.
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Old 09-30-2012, 06:09 PM   #11
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haha +

See Zillow for relative values and assessment history of area homes. Even?, fair?, mixed?.
Also... figure the total cost for the maximum, minimum taxes over the period you expect to own the property.

Saying that, reminds me of the property we didn't buy on Martha's Vineyard in 1967, for $30,000, that just sold for $1,800,000. As they say, "repent in leisure..."

Good luck!
Wow!. Yes that was the time to buy real estate!
BAsed on Zillow...we are paying too much. As I understand it, Zillow gets it's record from the tax offices across the country.
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Old 09-30-2012, 06:46 PM   #12
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Once I bought a home appraised for 100k, it had lots of improvements since being appraised last. I bought the before mentioned home for 200k, next appraisal 200k, and my taxes doubled.
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Old 09-30-2012, 07:17 PM   #13
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Exactly.

At least here in another country, tax assessment means nada. For years my farm land was assessed at $4k/qtr. Farmland routineley sold at 14-17 X assessment. One day 'they' re-assessed it all by multiplying the old assessment by 10.

When we bought our current house 12 years ago, we got a nice pamplet in the mail telling us how assessed value was moving to market value. We bought for $190K on June 8. Change day was June 30. Our house was assessed (at market value) at $240K. I appealed the assessment based on the sale and was told "market value is what the assessor says it is, nothing to do with what it sells for".

Just use comparative sales, your independant appraiser will. He won't even look at assesment. At least, he won't here.
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Old 09-30-2012, 07:33 PM   #14
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Taxes won't go down . They will just up the rate. Oddly enough, it is the tax assessor who is lowering the values....but they have not been lowered since 2005.
I own 2 places in Wasington, and that is not the way it has worked here. My real estate taxes have been lowered 40%. But if you know that you are right about your jurisdiction, then ignore what I said. Or ignore it for any reason or no reason at all.

Ha
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Old 09-30-2012, 07:48 PM   #15
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I own 2 places in Wasington, and that is not the way it has worked here. My real estate taxes have been lowered 40%. But if you know that you are right about your jurisdiction, then ignore what I said. Or ignore it for any reason or no reason at all.

Ha
Ha...That is the way it has worked in my sister' city. Tax assessments went down and taxes went down.

I suppose I was talking more in terms of where I live which is a small city of only 8,000 people. When tax assessments went down as they have here, the tax rate went up. This year the rate is up 17% in an attempt to make sure the city gets comparable revenues coming in. The city needs the money.

I never ignore you Ha!
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Old 10-08-2012, 05:04 PM   #16
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Not to beat a dead horse or anything but "swimming with the sharks" is exhausting.!

Trying to buy property in a resort area is tough. What makes sense to me doesn't make sense to others. Even I can see the padding in the appraisal to get it to the offer price.

Most concerns I have or items that should decrease the price are immediately discounted. Even I know they are "trying to swipe" it off the table.

If we end up walking away from this contract the next thing I want to learn is how appraisers make adjustments to their comps and why. For ex: When putting a value on a 2700 contracted for house, the price per square foot is $140. But when making an adjustment to a comparable that is 4,800 sq feet the price used for the adjustment is $50 per sq ft.

Or when one comp has a garage the adjustment made on our contracted house is only $5,000. Sorry, but I can't enclose an open carport for $5,000.

Seems the point is to pick percentage adjustments to try and get comparables to meet in the middle.

Last thing I will say is that in our case, there is nothing similar with the comps used and that it requires all these adjustments that are also open to challenge. That is because nothing has closed in recent months that is close to our property or if it is, it is so low the appraiser would not even use it.

Last thing I will relay is that after many conversations with the appraiser he admitted to me that if he had been doing this for a bank he would have come in right at the offer price. Now what the heck does THAT say.!

My first mistake was telling him what the offer was for. Won't make that one again.

Very suspicious to me. Or maybe I am such a data person that the data better makes sense to me or I get suspicious.

Can still cancel the contract up to October 15th....
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