I am looking at a small four-plex apartment building and the assessed value for tax purposes is significantly lower than the asking price. When I say significantly I am referring to the askign price being around 180,000 and the assessed value for taxes being 60,000. Now this is obviously good in the sense that my taxes will be lower and has nothing to do with the appraisal but should this be a red-flag at all and if so what for? Some people say this value means nothing.
New years joke= go to Detroit, where the selling and assessed values have no relationship to each other.
I am confused on why you want an "assessed value" very low compared to sale price. Looking for a fast moving market?
Assessed values are old historic averages, if your area is on market value assessment. It been at least ten years since Alberta moved from depreciated cost assessment to market value. What system does your local government use?
In Edmonton, that situation happened in 2006 when real estate sale prices went up quickly and the City`s market value assessment was 18 month old. Huge differences in market price vs assessment. Big increases in assessment values the next year with little or no tax increases.
And the residential sales bubble was burst in Edmonton in May 2007, but it took 4 months for the public to realize the peak was reached. Now assessed values are 20% to 50% above the current sale prices.
QUOTE (brentdavies @ Dec 31 2009, 01:28 PM) New years joke= go to Detroit, where the selling and assessed values have no relationship to each other.
I am confused on why you want an "assessed value" very low compared to sale price. Looking for a fast moving market?
Assessed values are old historic averages, if your area is on market value assessment. It been at least ten years since Alberta moved from depreciated cost assessment to market value. What system does your local government use?
To get a better estimate of the property value don`t use the Assesment nor the list price. As for a connection between true value and Assesment value that is highly uncertain.
Ask your realtor to do a Comparative Market Analysis and carfully review the report. If you agree with the report use it - but it depends also on how much trust you have in your realtor and in his skills.
Alternatively, ask for a true appraisal report from a real estate appraisar.
Finally do a cashflow analysis as taught by Don at the Acres weekend or in his books. Then you can decide yourself what the value is using the area`s or your own cap rates. If you don`t know how to calculate cashflow or use Don`s valuation system then ask your self why you are not a REIN member yet.
Hi Byron
Brent`s post is great
To add something very simple - Your assessment might changed based on purchase price 1-2 years after purchase - so no benefit.
