Homes Priced Over FMV
Hey all,
I'm curious what you think about homes listed over FMV. Specifically, homes listed at $100,000 over or double recent FMV analysis. Is it pretty common while the market is adjusting upward, and will FMV catch up? Or is it an indicator that these homes are overvalued? I'm cautiously leaning towards the latter, and believe that the market will correct itself and probably land somewhere in the middle.
It's natural for people to want to push the market but often it backfires if they push too hard. Especially if it's a price-sensitive market segment in the first place.
Usually if they market for too high of a price, they will have to go through a series of price reductions over an extended market time. They often end up getting less for it than if they had just priced it at market in the first place and paid a bunch of interest during the holding period to add insult to injury.
@Geordy Rostad
My market is the Olympic Peninsula, which has seen a growth rate very similar to yours. However, I notice that the FMV in your market is a lot closer to the listing and sales prices, which makes me think that the huge gap over here is just due to bureaucratic inefficiency and they'll become more accurate soon.
@Dylan Arveson
I'm confused now. When you say "FMV", what are you referring to? I interpret that as fair market value or what the market will pay.
Are you referring to a Zillow Zestimate or tax assessed value? I would not equate either of those metrics to an FMV.
It depends who is doing the FMV analysis . If that person is a buyer , the number will be low , if its a seller that number will be high . If its an investor that price will be low until they want to sell
I'm referring to the Fair Market Value listed on a parcel search. So tax assessed value. But in Washington, assessors appraise the land at what they consider 100% FMV. It could just be that the assessor in my market is very conservative in his valuations, but it seems like a red flag if homes are being listed and selling at up to twice his *recent* appraised value.
At least homeowners here are getting great tax rates!
Originally posted by @Dylan Arveson:
I'm referring to the Fair Market Value listed on a parcel search. So tax assessed value. But in Washington, assessors appraise the land at what they consider 100% FMV. It could just be that the assessor in my market is very conservative in his valuations, but it seems like a red flag if homes are being listed and selling at up to twice his *recent* appraised value.
At least homeowners here are getting great tax rates!
What you're asking is if your market is in a bubble? If I was you, I'd talk to a few appraisers to see what they think, and if they see any trends. You can talk to Realtors, but there's not going to be many that will predict a crash and tell you to wait it out!
In my county our property appraiser values the property (yearly) and then adjusts the "Just Value" to about 75-80% of that. When there's a sale, it makes his job easier, because then he knows exactly what the FMV is. The definition of FMV is the exact price that a seller would sell and a buyer would buy on the day of the contract. If the tax appraiser overvalues properties, then every homeowner would contest the valuation and cost the county more than they would gain in tax revenue. It's better to be conservative and not rock the boat.
Watch what happens to the tax assessor's appraised value the year after they sell. It will almost certainly be 75-80% of the sale price. In fact, you should be able to see the history. Check properties that sold over a year ago (or 2/3 years), and see how the valuation jumps.
It is possible that your appraiser does try to value at 100% and you are seeing a huge yearly appreciation. That may or may not be a sign of a bubble. I'm sitting at years of 10-12% appreciation. Nobody thinks that's sustainable, and yet not many think that it's a bubble, either. We are an interesting market, though, and may not have anything in common with yours.
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Real Estate Agent Florida (#SL3364820)
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There is only ONE way to determine FMV: without undue pressure on either party, what is a seller willing to accept and a buyer willing to pay. Check your comps, not a government assessment or Zillow, etc.
One other factor to check just to help you evaluate: check the expired listings. Nine out of ten times, they were overpriced. The one out of ten that didn't sell and wasn't overpriced had a 100 lb Rotti/Pit mix that the owners would not cage. ;-)
Tax assessments have very little correlation to what a property is actually worth.
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