You Can Rely on Assessed ValuePosted on December 6, 2013 by
As a trainer of appraisers for nearly 15 years, to those who hold private and public roles, one thing is certain, local assessor offices around the country make relying on their values rough on investors. However, for those of you connected to REIAComps, the control and feeling of confidence you have over your deals is priceless. The stuff going on in places like Clark County, NV or even your own area won’t shake you.
Most municipalities across the country use a formula tied to market value for assessing residential property taxes. In many parts of the country some form of non-disclosure is the norm. Thus, relying on assessed value is a second option.
However, when the decision to reduce the assessed value of a property from $19.5 million to $2,500 was decided by the State Equalization Board in NV, you can just imagine the problem this caused. The use of any assessed values to develop an offer price or ARV is literally eroded. There goes any hope of making a good offer to buy or sell.
In Nevada, this was such a significant decision which created disparate treatment among certain properties, a potential state-wide precedent for valuation, and will have a major financial effect upon the entire state. Fortunately the assessor’s office challenged the decision. The actual board, which is appointed by the governor, will now have to respond in a hearing, defending its posting to the state court.
Truly, it does not take a math genius (of which I am not) to realize property taxes would be substantially reduced if the state Supreme Court affirms the State Equalization Board’s decision. These same adjusted assessed values which many have relied on to do their deals will kill their business.
Now the real power is in using REIAComps to always calculate the value of your leads. Having control and feeling confident in the value strengthens your real estate business. Remember to always know the acquisition value as well as the after repair value (ARV). As investors, we want to have a solid idea of not just the value of a dwelling. Because we are proactive in our business acumen thinking of the next individual in the transaction, it is vital to demonstrate there is an equity position for the buyer.
Never rely on assessed value. Use your REIAComps to determine the best acquisition and ARV every deal you look at. Don’t for one moment let someone tell you the value. Let REIAComps show you for yourself.