I got a offer under contract yesterday I put it in about a week ago at 70% of asking price which was 129900 at the time I offered 90k but after it was accepted I looked on the bay county appraiser site and the just value was only 68k it seems like almost every deal I get now I got to cancel because they were overpriced to begin with and 70% of asking price just isn't a big enough spread what should I do?
Be careful about looking at the tax appraisal site. In MOST places those values aren't worth anything. The key is to look at comps, what other houses are on the market for AND have sold for!
Appraisal district values often have little to do with FMV and nothing to do with ARV and you should not make offers until you have a good idea of what these values are.
What should you do? Partner with a seasoned investor who understands due diligence, how to structure offers and exit strategies. Otherwise, you will continue your current frustrations.
I've wholesaled about ten deal since I started in July I always just offered 70% of asking price it seemed to be working until these last couple of months. How can I run comps I don't have access to msl so I got to depend on my realtor but I know her job is to paint the prettiest picture ever since she's getting paid from commissions
Tax appraisals are done completely differently than standard appraisals. More often than not a tax appraiser does not have time to actually see each individual house unless someone is contesting their taxes. They can't take into consideration the condition of the property and in many times do not have access to recent sales comps (especially in non disclosure states).
Oh and I "know" Texas is about 40% lower than the market. It is just how they do the values since everyone pays 3% taxes! so instead of lowering the % they lower the market rate.
Totally agree with what @Elizabeth Colegrove said. You are more concerned with the price someone will actually buy it for, not what the city/county has assessed it for. Here in Maryland most property tax assessments are lower than FMV. It's my understanding (I don't know for sure) that there is usually some formula they use to determine the value and then based on that value they use the property tax rate to calculate the taxes.
Keep in mind that tax assessments are done infrequently. For example a property could be bought, rehabbed, and sold and the new owner would be looking at the same tax assessment as before the rehab until the city/county does another assessment. I think they are done between 1-3 years.
If you've been successful thus far using only appraisal district values, then consider yourself very lucky, but don't push your luck. There are bound to be plenty of newer agents who will gladly get paid $10 to $25 to send you comps for each deal you're considering. Another option is to get licensed and get access to the data yourself.
@Quentin Hamilton Sounds like it's time for you to make an investment in your business to get accurate values. Some options:
- Find an agent that will allow you to be an assistant. I don't know about Florida but some states allow agents to have assistants for a small fee. The assistant then has access to the MLS.
- Become an agent
- Find a company (like REI black book) that has access to the Core Logic sales database. Pay the fee & run your own comparables
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