Profile picture for sunylu

Listing price vs last sold price vs property tax assessment

Is the property tax assessment a good indicator of the fair market value of the property? Does it take into account of the home improvement /whether or not with a garage? What are the reasons behind a listing price significantly below the last sold price (the price that the current seller paid)? What would be the best reference among the three for an opining offer ? Thanks
  • May 21 2012 - US
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Answers (6)

You really need to have an appraisal contingency on any home you decide to buy.  Property tax assessments are done once a year and doesn't take in affect property increases or decreases until the following year.  List price is usually done by a comparable market analysis from a Realtor, but can be off in price.  Appraisers take in affect + and - of comparable homes within a mile of the property.  They will give you the best market value.  Invest $350-$500 in an appraisal, especially if your paying cash.
  • May 22 2012
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Profile picture for Thomas Trifon
The owner has the right to chose not do use an agent on her side of the transaction; she does not have the right to tell you that you may not be represented.  If you want to use a realtor (a good idea), that agent could provide you essential information about the worth of the home, market trends, etc.  You want the most information that you can get before making an offer.  You can always hire a realtor, but have the offer presented through your attorney. If she balks at an attorney presenting the offer, move on to another property; something is radically wrong with either the property or her.

Good luck.
TT
  • May 22 2012
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Profile picture for sunylu
Thanks for all your answers. It is a property to be sold by owner in Washington DC. The owner does not want to deal with agent so I will have to deal directly with her. Any insight on how to processing welcome.
  • May 22 2012
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Profile picture for wetdawgs
In some states, the tax assessment is pretty close (+/-10%)  to fair market value last year or the year before.  In other areas,  the tax assessment uses some other magic formula and is way off from fair market value.

Property taxes in some areas take into account home improvements done with permits, so there is a big grey area on whether or not owners had construction done with permits or not.  (Not everything requires a permit.)

Why list for less than the purchase price?   Because the housing market has dropping considerably over the last few years and buyers won't pay the same prices they paid 5 years ago.

  • May 22 2012
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[off topic]

The listing price can be below the last sold price in a short sale situation. 

The best reference for making an offer is hiring a local Realtor who knows the area, who can advise you on an offer price.  Buyers agents are paid by the seller, so there's no reason not to have an agent represent you.  The bank is employing Realtors to do appraisals and negotiate for them, you need the same level of professional representing you.
  • May 22 2012
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I would say that the tax assessment would not be an accurate assessment of property value. Depending on your location the tax assessment could be 4 or 5 years old. Tax assessments generally take into consideration property improvments (that is if the owner needed permits for the improvements). Assessor's love to increase the value of the property increases revenues.

As to listing price being less than what a owner paid for the property. Just about anyone who is selling a property that they purchased at the market price(in the last 6 years) will be selling at a loss because values have been declining.

The best reference for the "fair" price or market value of a property is the sales prices of comparable homes (that should be the most you would pay).  As far as an opening offer that is really your discretion.  I'd ask your realtors advice (may vary based on seller's motivation and days on market).
  • May 22 2012
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