building assessement

[wohoo19m]

Hey there,

Ok, so here`s a noobie question. I`m checking out a listing right now and there`s an assessement price. Buutt...this price is WAYYY lower than the asking price of the property. Now, in my head, assessement price, is the price the property was appraised at, or worth, but I`m not sure that`s what this is. Should be simple enough, but can anybody help me clear my head?

 

[Thomas Beyer]

QUOTE (wohoo19m @ Feb 12 2009, 06:07 PM) Hey there,

Ok, so here`s a noobie question. I`m checking out a listing right now and there`s an assessement price. Buutt...this price is WAYYY lower than the asking price of the property. Now, in my head, assessement price, is the price the property was appraised at, or worth, but I`m not sure that`s what this is. Should be simple enough, but can anybody help me clear my head?
correct .. and this price is one of MANY variables to consider if this is a property you wish to buy ..

usually, but not always, the assessment is LOWER than the market value ! Why is it usually lower: because the city does not want every owner to appeal their property taxes .. they could not handle it. certainly a YELLOW flag .. but not a red one ... yet ..

assess rents, potential, location, area upside, property upside .. then decide ..

 

[wohoo19m]

Well I don`t have the statements & rento roll. All I have is the base listing at the moment. The potential is there. The only downside is there`s only one major employer, but it`s an army base. Yet it`s close to one of the major cities in the province, like a 15 minute drive. I`m doing the research on the area right now to see it`s growth potential in the future. As for property upside, I haven`t viewed the property yet, it`s about 45 minutes drive though, so most likely will do this week.

So what WOULD make the assessement be a red flag?

 

[RobMacdonald]

The assessment isn`t necessarliy a red flag. The annual assessments are done for tax purposes which is not necesarilly a reflection of market value. It is similar, but the market has more factors that cause fluctuations.

 

[invst4profit]

As stated it may not be a true value based on the market.
As a investment buyer it is up to you to determine what a property is worth, based on income and expenses. This is where education and experience enters into the picture and where novice investors often go wrong in determining price.
Although a seller may know what they would like to sell it for and the market may determine a comparative market value those numbers may not be anywhere near what a investor may be prepared to pay for a given property.
You decide what it is worth and make an offer or move on to another property.

 

[GarthChapman]

QUOTE (invst4profit @ Feb 13 2009, 09:36 AM) As stated it may not be a true value based on the market.
As a investment buyer it is up to you to determine what a property is worth, based on income and expenses. This is where education and experience enters into the picture and where novice investors often go wrong in determining price.
Although a seller may know what they would like to sell it for and the market may determine a comparative market value those numbers may not be anywhere near what a investor may be prepared to pay for a given property.
You decide what it is worth and make an offer or move on to another property.

Greg has made a very important point here. "You decide what it is worth and make an offer or move on to another property." You must take control of our investment decisions. Never mind what others tell you a property is worth. Critically important.

 

[alexh]

Is it possible that a municipal appraisal be overvalued?

Or should it normally be slightly under or even.

 

[invst4profit]

Yes, Yes and Yes.

With changing markets and assessments being done every three years or so it could be anywhere depending on the type of structure.
Since assessments are never based on actual visual inspection the condition of the building new renovations or neglected structure is never taken into consideration in placing value.

For the most part you can ignore tax assessments in valuing properties.

 

[Nir]

Wohoo,

I suggest you do not spend more than 2 minutes on it before knowing the MONTHLY RENT (and potential rent)- by far the most important factor of all (but not the only one).


You`re right - it`s basic, but apparently you mentioned "The potential is there" without knowing the rent.

Neil

 

[wohoo19m]

Thanks for all your answers and tips.

oh, and I do know the rent. and from the many valuation methods I`ve tried, the building is under priced when compared to the yearly income it produces, but there`s still alot more I want to find out about the region to see if it would be a wise choice as an investment as well as planning what to do as to increase the value of the properties.

edit: oops, just noticed that I didn`t have it at the time. NOW I do