In this post I am going to add the Reverse Median Tax Search to the Predictive Value Model. I am fiercely proud of our profession and I am always trying to make sure that I am serving my clients at the highest level I am able to provide. We handle the largest asset in most people’s lives, and I think it’s reasonable to take that responsibility seriously.
The Predictive Value Model is the result of that core principal and my interest in applying math and data analysis to the process. I talked about the traditional CMA as one piece of the model. There are actually seven components to the model.
Today I would like to talk about the Reverse Median Tax Search. The idea here is to find out what similarly assessed properties actually sold for during the past 6 months. First find out the property tax for the subject property. Using that value, create a tax range of plus or minus 5% and do a search of properties that have closed in the past 6 months in the same tax district using tax range as your only filter, and find the median value.
I really like this method. It is giving you a picture of properties that the assessor has valued similarly to your subject regardless of their makeup. There are a few things to take into account when including or excluding properties here. Do not include new properties unless they are fully assessed, here in Illinois we assess in arrears and new construction will skew the sample. If you are including short sales and foreclosures, I would suggest applying compensation. This result will add another component to your value model and help to reduce the margin of error.
I want to relate a story of a home that I used the model to value at 710 Brigham Ct, Geneva IL a couple of months ago. This was a relo property and after submitting my analysis the coordinator called and asked me if I was sure that my value was accurate. Now I am used to being questioned about my values because they are usually lower than what other Realtors have given the home owner, so when he said I was $50,000 higher than the other two Realtors I was shocked and rechecked the model. I felt that I had done the analysis correctly, but I was still pretty nervous. The home sold in 4 days for $360,000 the model predicted $359,123. I know that there is luck involved, having the right buyers show up at the right time and what competition exists, but it really impressed the coordinator. He wanted to know if I would give him the model.
710 Brigham Ct, Geneva IL
Next time...Sold Percentage of Assessed Value.
Please see the other posts in this series.
Better Real Estate Through Math #1
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