Tax appraisal is different than a bank appraisal and there are all kinds of reasons the tax appraisal is likely the wrong number to use.
Banks will want market value or something pretty close to that in most cases.
You can offer tax appraisal, but I think I know the neighborhood you are talking about and that number likely won't work.
Looking at tax values is not a good indicator of a good or bad deal. Remember this is a value that has been set by a computer and not by someone who has been inside the house, maybe has never seen the house, been in the neighborhood or even been in the city. These homes are likely to go closer to $400k than to the $265k number.
There are several other caveats in this area that may not make this a good deal, even at a $265,000 price if you could get it that low.

It depends on if the bank owns it or an actual owner/builder. My best advise, call the realtor and find out what the situation is, then go from there.

Good luck!

Local area sale comparatives are what rule the DFW marketplace for successful home sales. Comps don't lie. Use comps that are 90 days or less right now when determining what to offer. Check comps 6-months back as well, so you know if the neighborhood is returning from a dip last Fall/Winter, or if the area is still coming down and hasn't really recovered yet. We're hit or miss, and without knowing the neighborhood, no one can really tell you if $265k would fly on a home listing at $400k. That's a bit of a steep reduction for our DFW Metroplex, but it really just depends on who bought it last year, how they bought it, when they bought it, and how badly the bank wants that home off their ledgers.

Have a blessed day!
Ronda


Ronda Allen, C.P.M.
Realtor, Life Coach, and Certified Purchasing Manager
RE/MAX Dallas Suburbs http://www.comingsoonhomes.com http://www.keithdobbs.com

Taav,

While you can offer the seller, in this case a bank, $265,000 I will explain to you some of the reasons why offering such a low ball offer with a bank is unlikely to work from my experience working with banks in foreclosures. If a homeowner had (PMI) premium mortgage insurance, banks have had a history of allowing those homes to foreclose and take the insurance, because they get fully reimubursed with their insurance for the amount of the loan. If the homebuyer paid 20% of the loan off and requested the removal of the MI (Mortgage Insurance) or there was no MI, then the banks are more willing to negotiate. As a Top Producing Realtor with years of selling experience, I can tell you that we work with and negotiate with banks and seller's or buyers every single day and have for years. It is very good to have a licensed REALTOR who will protect you and fight for you to help you achieve your goal in buying the home you desire. My commissions are not paid by you and the recent law changes have required banks not to decrease Realtor fees, so they are a part of the equation already for the bank.

It is like walking into a courtroom unrepresented. Certainly you know the facts of the case, but you want an expert who knows the judge, who knows the law, who knows what can happen because this is a HUGE investoment, the largest investment you will make. When you go into a courtroom, you will want a Lawyer. Having your own REALTOR when buying a home can provide you with tremendous benefit.

Tax assessor and Market values are completely different. I understand wanting to look at tax values on a house and offering that. However, on a foreclosure an appraiser and Realtor have told the bank what they can sell the house for, so unless the home has A LOT of damage or there are unusually high days on market and you really want to BUY THIS home, you will likely need to increase your initial bid to get within the realm of the market and hire a Realtor to use their expertise to go to work for you.

The good news is there are deals to be found and had. What are your goals?

I hope this is helpful,

Nicole Arenas, REALTOR
Top Producing Realtor
214-991-9507 http://www.nicolearenas.com
blog: http://activerain.com/nicolearenas
nicolearenas@ymail.com

Hi Taaav,

Thanks for your question.

The market value is determined by what's sold, what's pending in sales in the neighborhood and what a willing and able buyer will pay for a home. Some foreclosures, Realtors put in the MLS service at closer to full retail value and some put it in for closer to the foreclosure price. Do you which it is in this case? Because of the dynamic changes that are going on in the marketplace right now, appraisers are compelled to use comps that are no more than 3 months old when the typical standard was 6 months. The true value of the home will be affected by what's been happening in that neighborhood recently. Are you looking to buy in McKinney? I know, for example, Stonebridge has been affected by foreclosures. We had a friend who was trying to sell her home there and had to take it off the market because she would've had to take too big of a loss. Tucker Hill is newer and hasn't had nearly the foreclosures.

My background is in new home sales and we would love to speak with you about your home purchase and an appropriate pricing strategy.

Thanks,
Terri Hayley
The Hayley Group, Keller Williams
Top 5% of Realtors

Taaav2909,
You have already been told the difference in Tax appraisals and Loan appraisals. I would just have your Realtor do some comps and suggest a price. Offer that and see what happens. Do use a Realtor, a member of a board, so that many comps will be available.
What are the other homes this size in this neighborhood selling for?
Good Luck
Margaret

TAAV....

As many have mentioned tax value and market value are very often two very different things for lots of different reasons. If it is a new home, chances are tax value has just not had a chance to catch up. Chances are it was appraised during construction nearly a year ago now. New tax value in May will likely jump way up.

You can offer anything you want for a home. My guess is though if they are thinking $400K or even more, than $265,000 will not even get a response. That's just too big a move. I rarely look at tax values when trying to decide what to offer for a house. They're just way off....sometimes way too high, sometimes way to low.

What you want to be prepared for though is likely a huge jump in tax values. If you think this is a 400K neighborhood and the current tax value is $250K, you want to be mindful of a huge tax runup on your escrow account. Purchasing today your lender will likely figure escrow on the lower value. Tax value will likely jump $150K, so when they go to pay taxes from your escrow account in December there could be a shortage. Then they will up your escrow collection to make up for the deficiency from this year, and catch up for next year. In this senario that could easily up your monthly payment by $800 or $900/month after one year for one year, then it would drop back down to where they are collecting just the increase in value..about $400/month on your payment. Hope this makes sense. It catches even the best people by surprise and has created foreclosure situations in many cases.

Taaav,
The tax assessed value and appraisal are two totally different valuations. My suggestion is first to get an agent to pull you comparables for the neighborhood (is always a good sounding board) and then if you are seriously comtemplating purchasing get the home appraised. It shouldnt be more than $400.000 give or take before you go forward and if you are financing the lender may use the appraisal that would save you on the back end. Good luck and I am glad you are researching and recomend a thurough process before you make such a big purchase.

Taaav,

I would be happy to help you formulate an actual market value of the property and make an offer, that is if your not already in a signed contract with a buyer's agent. You can offer whatever you would like to on a home, but the seller probably wants closer to $400k and may not take your offer $135,000 less than what they have listed at. The tax appraisal value and the market value are assessed differently. Just because the city taxes them at $265, does not mean the market will not bear $400k or that it WILL for that matter.
As a Professional Real Estate Agent and REALTOR, I come up with my numbers for the market value of a home based upon the recent sales (not listing, not tax values) of a home, along with other factor's including location, age, price, desirability, condition, etc. I can help you find foreclosures but I would tell you that I think that being realistic in your offer is very important.

If I can help you with your home search and sell, feel free to call me or email me!
nicolearenas@ymail.com
Nicole Arenas

Why the difference?

Often, with new construction, the tax appraisal reflects the land and the previous property that stood there. So, if it was a vacant lot (or, more likely, a lot with a tear-down on it) and the tax assessment is supposed to be at 100% of fair market value, the tax assessment is reflecting what was there prior to the new construction.

As for what you can offer the seller: You can offer anything you want. Recognize, though, as noted above, the $265,000 probably doesn't reflect the new construction. And, frankly, even if it did, never ever base an offer (or an assumption of fair market value) on a tax assessment.

Contact a Realtor and have him/her do a CMA on the property. It may be tricky--it often is when a neighborhood has multiple foreclosures or short sales--but it's much more reliable than relying on a tax assessment that may not even reflect current construction.

Hope that helps.