| DON'T
COUNT ON THE COUNTY ASSESSOR¼S ASSESSMENT VALUE!
Many foreclosure
notices will include the County Assessor¼s value
(land and improvements) for your reference. Very rarely
does this amount accurately reflect the value of the property.
County Assessors use formulas for determining the current
market value of each property, with small increase adjustments
made each year by a predetermined formula. When significant
improvements are made to a property, thereby causing a
building permit to be issued; or when the property is
sold, most Assessors will adjust their valuation based
on either the actual sale price, or local sold comparables.
The more time
that has passed since the reassessment, the less reliable
the County Assessor's value becomes. Rarely does the Assessor's
formula keep up with the market (either up or down). Fast
moving markets either appreciating, or depreciating, are
not reflected in the Assessor's computerized formula.
In the early 90's, values were dropping quickly across
the country. Many properties were being assessed at a
higher value each year, while their actual market value
was depreciating. Over a period of a few years, the assessment
was higher than the real market value. Property owners
protested their assessments, providing recent sales comps
from their neighborhood as evidence of the actual market
value of their property. In most cases, the County Assessor
made an adjustment downward with a reassessment of the
property. However, when the market is out pacing the Assessor¼s
value, the property owner does not also ask for an increase
in the Assessor's valuation. The value gap can significantly
increase from year to year, between "actual assessments".
California's
Prop 13 capped how much the County Assessor could reassess
a property from year to year. This assured property owners
that their tax bills would not grow out of control beyond
their personal affordability, just because the market
around them has appreciated during their period of ownership.
Assessor's
values can be off by as much as 50% from the real market
value. Don't rely on this value. You can however, use
this value to provide you some clues about the ratio of
the improvements to the total assessment.
The only way
to determine market value of a property is to compare
the subject property to recent sales within the same neighborhood.
The more property sales of comparable location, type,
size, age, style, features, bedrooms, bathrooms, and condition,
the more reliable the sales comparison, and thus the appraised
valuation.
Shark Bait
- The foreclosure buyers' software provides you with a
valuation for each new foreclosure property based on recent
sales within each neighborhood. Shark Bait imports records
of properties that have recently sold (within the past
year) and groups them into small geographic areas (either
by map codes or zip codes). These historic sales records
are readily available from any real estate agent with
access to the MLS, or through local real estate data companies,
such as Dataquick. As each new foreclosure record is imported
into Shark Bait, a value is automatically determined,
based on comparing the subject foreclosure property with
all others that have actually sold within the same neighborhood.
While Shark Bait does not actually go out and look at
the property, it is able to determine fairly accurately,
the actual current market value for each property. This
valuation is of course only a preliminary determination
of value, since as each foreclosure property is more completely
evaluated, a more accurate and finite appraisal is allowed.
This initial valuation is used to calculate the critical
debt to value ratio that is the key to your interest and
profits!
Whether you
use Shark Bait, or just paper lists and notices out of
your legal newspaper, you need to quickly determine what
the value of each property is, and then the debt to value
ratio. Time is money in this business. You only have so
much of each, so you can't afford to waste either!
We
hope this tip was helpful in your foreclosure buying efforts.
Please visit us at http://www.digitaldeal.com and take
our free tour of the Shark Bait software.
< back
|
