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Pay Listing When Tax Value is Much Lower?

Im a first time home buyer looking at a 3 bedroom 1300 sq ft home in rural northern va. The listing price is 139,900. The tax value is 118,000. The house has been on the market for roughly 2 years. I would like to bid 110 and ask for closing costs and nothing else (no warranty, septic dug, etc) My agent feels like this may insult the seller but I feel in a buyers market that this is a good starting point since the tax value (assessed just last year) is much lower than listing price. Do I run the risk of insulting a seller and them walking away?
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April 02 2012 - Luray
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Answers (6)

Tax value has nothing to do with market value.  That is why Zillow zestimates are always so inaccurate.

That being said, making an offer costs you nothing as long as you are fully aware of the potential outcomes.
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April 03 2012
once again you are dead on and I don't care where the property is, it's been on the market for two years.  You're thinking is dead on and that is what counters are for.
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April 03 2012
Absolutely not make the offer or find an agent that knows better who will work with you and never us a listing agent to but the home for sale.
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April 03 2012
Good morning, user922973,

On my first house purchase, I too, did not understand the seeming disconnect between sale price and tax assessment. Apparently, for years it is quite common for local governments to "assess" properties at some percentage of sale values. That is very typical of local governments here in VA. However, please remember that even if your locality says it assesses at 100%, there could still be a disconnect as local governments are not really appraisers, and they do their reviews probably once a year. In some markets, a year can be a long time (values could rise or fall significantly in one year).

If the home has been for sale for two years, offer what you feel is a good offer. I would also include the septic and home inspection clauses. I am not sure why the seller would be offended. Your bona fide offer gives them a chance to counter or accept. Nothing personal about business, and if they feel insulted over a real estate offer, they can just refuse your offer.
If you are refused, you can choose to up the offer or move on.

Best wishes, Jim
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April 03 2012
If you're from this area in Northern Virginia, you know fair market property values are most times significantly higher than tax assessed values.  If you are talking about anything in Prince William, Loudoun, Stafford or even Spotsy with regard to "rural" areas, then your agent may have something.  If your looking in Winchester, Warren, or Shenandoah then the pricing is considerably different and you have much more leverage with regard to your offer.

However, if the property has been on the market for 2 years at $139,900 with no price reductions, then there may be more to things than meet the eye.  I'm not sure if I understood you correctly.  You're not planning on purchasing this home without the benefit of a septic inspection, are you?  The Northern Virginia Regional Sales Contract specifically allows for both the well and septic inspections to be done either at the buyer or seller's expense.  If this is a normal sale and not bank owned, you should definitely ask the seller to pay for this. Finding out your septic is non-functioning could cost thousands!  

Good luck!
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April 03 2012
I dont know about the market in VA but if the home was in WI I would not hesisiate  to write an offer at $110K for my client, but I would not ask for more than $1500 in closing cost.  

I would also suggest having a well and septic inspection along with a home inspection done at your expense or offer more and ask the seller to pay for the well and septic inspection..

keep in mind however,that your agent is the one to answer those questions, as they know the maket best.

Good luck

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April 03 2012
 
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