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Don't Rely on Tax Assessed Value When Pricing Your New Listing

By
Real Estate Agent with Hawaii Military Realty, Inc.

By: David Kucic, Hawaii Home Buying and Selling Team, Tropic Lightning Real Estate

So you want to sell your new listing? 

You have probably followed a checklist similar to this:

  • Take good pictures of interior and exterior
  • Advise your sellers to clean, repair and get rid of clutter
  • Make sure there are no foul odors in the home
  • Cut, water, trim, edge, prune and weed the landscaping
  • Put your sign in the yard along with your flyer box

So now you are ready to roll but before you got this far, you had to talk to your seller and determine the price for the listing.  Hopefully you will have savvy sellers that understand the current market and you are able to help them realize their home may not be worth what they think it is.  Should you take the listing if it will be overpriced from the start?  That depends on how your sellers express their reasoning to you.  Maybe they will say that they want to "test the waters" for a few weeks only and then agree to lower their price immediately if there is no action on the property.  What if you do take it and you know that it is overpriced?

How are you going to come up with a creative enough justification in your listing remarks for the price that you put on the property when it is clearly overpriced?  Well, maybe there are truly some amenities that the home has that none of the other homes in the neighborhood have.  Is there an inground swimming pool somewhere in that 3,300 square foot lot that none of the other homes have? 

The point of this post is to talk about the TAX ASSESSED VALUE of the property.  You know as well as I do that the market in Hawaii has changed drastically over the past 2 years.  This is totally throwing off the tax assessments for now until the next assessment is done.  The assessed value that is placed on a large number of homes is way above what the home will currently sell for.  This doesnt apply to all homes but it sure does apply to a very large number.

When placing a price on your listing, you must think more like an appraiser than the tax assessor.  The appraiser is looking at the most recent activity where the assessor has used the information that was current at the time he did his assessment.  Pull up the comps.  Talk to a fellow realtor.  Look at recent sales and look at the current asking prices.  Call your favorite lender especially if he or she is willing to help you.  Talk to the lender about the implications of overpricing a home only to have the appraisal come in low.  Whatever route you choose to use just dont rely on the Tax Assessed Value to determine your price.  It is not a good tool to use when basing your sales price.

Visit us on the web for all of your Hawaii Real Estate needs at www.davidkucic.com.  Searching for a home to purchase?  Enjoy our FREE Hawaii Real Estate MLS search function when you visit.

 

Randy L. Prothero
eXp Realty - Hollister, MO
Missouri REALTOR, (808) 384-5645

Tax assessments should never be used for any other purpose than to decide how much the taxes are.  They are never a reflection on the actual market value of the home.  The person doing them is sitting behind a desk with instructions on how much money the county needs.  They never see the home, they have no idea the condition, nor do they care.

Jul 20, 2007 05:11 AM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner

You are preaching to the choir.  Thats why I wrote this.  I have seen several agents that are posting on the MLS "Priced 30k below tax assessed value".  That doesnt mean squat.  Like I wrote in my post, the comps need to be done accurately without regard to the assessed value.

Jul 20, 2007 05:20 AM
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

Hrey tony,

I hate taking anything overpriced as a matter of fact even-if it is priced right we still are having a hard time getting to the closing table. Honestly ...it might be better to price it at the assessed value.

Jul 20, 2007 12:39 PM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner
Neal-That is a tough market right now where you are at.  I feel very fortunate to be right here in Hawaii.  The problem with some of the assessed values is that they are not current and really throw the homeowners and prospective buyers off.  It is definitely not a good choice to use in Hawaii.  Thanks for stopping by Neal the Real Deal.
Jul 20, 2007 12:44 PM
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

I agree that the assessed value should never be used as the primary indicator of value particularly in a volatile market.  Unfortunately, there are still a number of people who think this is a valid way to price property.  Pricing property correctly is a much more complex process than simply doubling or even tripling assessed value.  Thanks for providing some good advise in this post.

Jul 21, 2007 03:01 PM
Diane Bell, Hilton Head Real Estate, Bluffton
Charter 1 Real Estate, Hilton Head, Bluffton, SC - Hilton Head Island, SC
It sure would be a crazy world if we relied on tax assessments for pricing.  Thank goodness, we have a better method.
Jul 21, 2007 03:03 PM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner
Aloha Lola!  It sounds like you have maybe had a similar experience in Grand Rapids??  Using the tax assessed value means nothing in determining what a listing price should be.  Thanks for stopping by.
Jul 21, 2007 03:32 PM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner
Diane-We have a better method too but some folks just dont understand the way that the tax assessed value is obtained.  They can be saved though if they have a professional realtor working for them and guiding them in the right direction (like Diane Bell from Hilton Head!) Aloha!
Jul 21, 2007 03:33 PM
John Occhi
AZ Veteran Notary Services - Marana, AZ
Mobile Notary Public/Certified Loan Signing Agent

In California the tax assessed value really has nothing to do with the current value.  Under the provisions of "Prop 13" the assessed value is typically the purchase price plus limited to a 2% increase in value per year - that it.  So, if you bought a home 10 years ago for $100K your assessed value would be $100K with a 2% compound; i.e. - year 1 - $102,000, Year 2 - $104,200, etc

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Jul 21, 2007 04:24 PM
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE
The assessed values over here are like 60 to 80k above what they're selling for (single family) and in some cases even higher....hopefully, they get it right and will go down. Hopefully.
Jul 21, 2007 04:34 PM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner
John-Thats an interesting way to calculate taxes.  From what I understand, Florida has a program where the current owners pay taxes based on the price they paid for the home but when they sell it, the new owners pay a rate equivalent to the current rate.  From what I understand (I am far from an expert on Florida real estate or taxes) that keeps some homes from selling.
Jul 21, 2007 05:10 PM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner
Sally that is exactly what I was talking about.  The listings say "priced 60k below assessed value".  Like that really means anything!  I dont know if the agents writing the comments dont know any better or they are trying to fool someone into thinking they are getting a great deal.
Jul 21, 2007 05:12 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

David.... this is so true. I was even on the phone with a realtor a few days ago that was telling me what homes were assessed for what. I was a little shocked hearing this from a realtor who claimed to be in business for 5 years.  We need to educate a lot of people on this.  good post.

jeff belonger

Jul 21, 2007 06:01 PM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner
Thank you Jeff Belonger, Mortgage Man.  I am just astounded when I see realtors using the assessed values to try to figure out a listing price.  It just doesnt have anything to do with it.  As I said on an earlier comment, its like preaching to the choir.  You know it, probably a large percentage of AR members know it and I know it.  Its just that some are out there flapping in the wind and dont have any idea what they are talking about when they use the assessed value to showcase a listing.
Jul 21, 2007 06:43 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans
welcome to the world of sales.....    I loved it when you said... "flapping in the wind"  so true....
Jul 22, 2007 02:22 AM
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

Trying to fool someone....who doesn't know any better...which may be them as well. I do say something to the agent...shame of me for being blunt.

Jul 22, 2007 05:53 AM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner

Jeff-You must remember flapping in the wind from your Army days right?  I am sure that is where I heard it.  You must remember those Soldiers that fit that category dont you?

I still have a really hard time thinking of myself as a salesman.  The term salesman sounds slimy to me.  I am not going to talk someone into buying an item that they dont want.  That is what I consider a salesman. 

 

Jul 22, 2007 06:13 AM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner
Sally-If they have to go as far as pointing out the assessed value, the home is usually not worth showing anyway.
Jul 22, 2007 06:40 AM
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE
I think the only time I pointed that out because (obviously) property taxes went up....new assessed value I put on there. And the condo sold for less....priced less (as it should have been) and sold for a little less than that.
Jul 22, 2007 06:44 AM
1SG (Ret.) David Kucic
Hawaii Military Realty, Inc. - Ewa Beach, HI
President and Owner

You didnt do it though to make it look like the house was being sold for less than it was worth.  You were providing the right info to the consumer by letting them know the values were changing.  That is honest business.

Jul 22, 2007 07:16 AM