Market Conditions in 02127>Question Details

Mages99, Other/Just Looking in New York, NY

Is % of asking price over tax assessment a good measure of whether a property is overpriced relative to comps?

Asked by Mages99, New York, NY Sun May 13, 2007

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Using a property tax assessment to value a property is about as valuable as using a Zillow Zestimate to value a property.
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2 votes Thank Flag Link Tue Jul 10, 2007
Tax assessments are the most over-used and incorrect way to value a home. Recent solds over the past 6 months are typically the best but right now with our flat market, you could go out even further (1 year) to get an accurate price. Stick to similar homes close by and go out 12 months instead of the usual 6 months. Trulia is a good start, Market Snapshot is really good too! Asking an agent is Best. Good Luck!
2 votes Thank Flag Link Tue May 15, 2007
HUH? the tax assessment - oh boy. No do not use that as a measuring stick. By any means. What you need to look at are actual comparable sales, that occurred within at least 6 months, and depending on the market - 1/2 mile. Usually a broker is the best place to start. They can provide you with some of the best local data. that being said, a local broker will have fast access to the latest closings in their area. the tax info, as Roberta Mentioned can be WAAAAAAY off, in either direction. You just never know. Trulia has some awesome trend reports that you can check out, and again the local brokers can really point you in the right direction.
2 votes Thank Flag Link Mon May 14, 2007
I would never use tax assessment. In my area (uh oh, the Trulia police are going to get mad at me for answering a question that isn't in my area!) the assessment value has nothing to do with the market value. In a nearby town there is full assessment, and at this moment the assessments are pretty close, but closed sales is the ONLY 100% correct method of determining if something is over price or not.
1 vote Thank Flag Link Mon Nov 5, 2007
No. In order to determine a range of fair market value, it is best to review 1) home that have sold recently (approximately 6 months if you can find enough comps), 2) properties that are currently under agreement and 3) active properties (the current competition). However, I would review the assessed values of all of the sold properties to determine, on average, the relationship of fair market value to assessed value. Every town and city throughout the country values homes in a different manner. Also, some municipalities re-value every year while others do it less frequently. You should speak with the assessor in your area to learn more about their process. It is a good exercise to go through so you informed about the assessment process before you purchase in a community.
1 vote Thank Flag Link Mon Nov 5, 2007
Another way of figuring out the value of home would be to use pre-bubble prices and grow it using an appropriate compounded growth rate -- say anywhere from 5-8% annually -- for more read this:
1 vote Thank Flag Link Sun Nov 4, 2007
No, never use tax assessment when trying to calculate comps. Being a numbers guy, I have tried to find a pattern for valuation using tax assessments for hundreds of homes and it just never works. The problem is the inconsistancies in tax assessments. They are all over the place and half of the time aren't even accurate for what they should be. So the data on that side of the valuation is wrong - making the output wrong. To even get close to an accurate reading you would need to use a large number of homes both sold and unsold to see a pattern. Since you're probably searching for a comp on a single unsold home, it can't be done because that tax assessment may be off for that single home.
1 vote Thank Flag Link Tue Jul 10, 2007
No, it is not. A home's tax appraisal value is for calculating property taxes only and usually has no relationship to a home's true market value.

A good way to determine value is to look at comparable homes for sale, and more importantly, comparable homes that have sold recently, i.e. that is within the last 6 months or so.
1 vote Thank Flag Link Tue Jul 3, 2007
Mages99: I would not use tax assessment as a measure of value. In a declining market, it may be too high and in stronger markets (temporarily) too low. I would also be wary of using online valuation tools for the same reasons. To accurately assess local market conditions, I would look not only at recent closed sales, but also pending sales, average days on market and inventory levels. The successful real estate investor looks not only at history, but at how a market is trending.
1 vote Thank Flag Link Sun May 13, 2007
Roberta Murp…, Real Estate Pro in San Diego, CA
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I would not use tax assessments in any county to determine the value of a property. The value of any property is the salesprice. So how do you determine the value prior to sale. The value can best be estimated by using comps, that is using the sales prices of comparable properties that sold recently, preferrably within the past three months.
The market has changed a lot an tax assessments are just too old to use. Good luck.
0 votes Thank Flag Link Tue Dec 18, 2007
Tax assesments alone are an inexact way of determining your properties value, but I don't agree that they are of no use. Trends can be extracted from the data by cross referencing recent sale prices and using a more general approach with a lot of data. If you can access 10 or more properties similar in style, age, neighborhood and living area and cross reference against a recently sold properties, you can begin to recognize a trend in the ratio of sale price to assesment value. Keep in mind that you may want to throw out the high and low prices just because they may have information about the condition or features that may not calculate into the assesments. Also, make sure your assesments were done in the same year, as most assesors change there formulas and values frequently. This is a viable tool to use, but your best advice will always come from an experienced and succesful Real Estate Professional.
0 votes Thank Flag Link Mon Nov 5, 2007
If you are using a licensed real estate agent to purchase (and you should), ask them to do a reverse market analysis using the property you are thinking of buying, it should show recnet homes that were sold (don't use any home over 4 months ago), similar homes that have gone under contract (ask the agent the approx. % of selling price to asking price) and how many other homes that are like the one you want that are still on the market (remember a well priced home no matter what market we are in goes under contract within 60 days) if there are a lot of homes like the one you like, your bargaining position goes way up, fewer homes your position is less. Try using a Buyers Agent -they have no vested interest in the home as it isn't listed with their company.
0 votes Thank Flag Link Tue Jul 3, 2007
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