New Property Evaluation

Hi Mike,

Glad to hear from you this morning. Listen, I’ve put up a real estate facebook page and a real estate blog – I’m trying to post semi-regularly – which means, when I have time and when I have a topic that needs to be addressed. And this is a topic that begs addressing. Check it out http://kdsfarm.blogspot.com or you may just visit KDMcCall.com and click on the blog link. For Golden Valley I’m still posting, you can visit the GoldenValleyNC.com and click the blog link there as well.

Sitting at my desk with my morning coffee, I've been looking at short-sale information. A whole lot of us are upside down on our properties and I think as these tax valuations come out this is going to be the case. I just got our evaluation yesterday and it's about what we owe on our note. If we had to sell, had to add a real estate commission to the tax value, we'd be underwater. It's unusual for tax value to be greater than market value, but  in Bostic, from October 2010 to October 2011 that was the case for 90% of the properties sold.

But let me get on to your question. Why did the county evaluate your two properties so differently? My guess is that there are two different appraisers. That’s very much a guess, as I do not have access to their criteria, and a certain amount is subjective. Like the client who asked this morning, could I maybe get a long term rental? How long is long term?

Same with large rooms, quiet neighborhoods, and expanding waistlines – I would submit that all are subjective.

So, my response is conjecture. But I have a report that shows a certain amount of criteria the appraisers are using for their evaluation, it is much the same a real estate agent uses for a comparable market analysis (CMA). Much of what we do is subjective, like grading lumber, yes there are some hard and fast rules, but there’s a lot of leeway, too. One of the huge problems I have doing CMA's is I am not a person who sees an acre in an acre. I see the view, I see the hardwoods, I see the view-shed, I see the contours, I see the building site, I see the HOA, I see the roads and drives, can you get highspeed Internet, cable TV, cell phone service? I see an acre very differently than, say, an investor, or a builder or the developer's salesman.

A couple of weeks ago, I heard from a homeowner who had purchased a foreclosure and the county was valuing the house at more than the sales price, way more. The homeowner was upset and intended to appeal. I explained: the county is taking into account surrounding property values, replacement costs, just because you bought your house at $29.50 on the square foot doesn’t mean it’s actual value is $29.50 per square foot. You got a deal – right? It’s like this – let's say you bought a car from your brother-in-law in SC for $565.00, it’s worth $4,000 according to Kelly Blue Book. When you bring that car into the state of NC, is it now worth $565.00? Of course not, and we all understand that. Well, it’s the same for real estate.  And why would your brother-in-law sell you a car for $565.00? Maybe because you conceded the dining room suite in the estate sale, the one your wife’s sister was so keen on. Maybe, maybe not…You got a deal. That doesn't change the value.

Why did the county evaluate your two properties so differently? The honest answer is I don't know. Will it hurt to appeal? Hmmm. Let me remind you that 90% of the property in Bostic in 2011 sold for less than tax value. If that continues through 2012, how will that affect your market value, and is that important to you?

I've been answering questions in blog posts when the topics are like this one, timely, relevant, and like the insurance issue, are about something you and I need to know about. (See: GoldenValleyNC's Blog - mapping service some of the insurance companies have subscribed to - are you more than 5 miles from the fire department). See February 10th at http://goldenvalleync.blogspot.com/.

It's nice to have something to write about this morning. Thank you for your timely, relevant, newsworthy question. It's questions like this that make the real estate blog worthwhile. Enjoy your weekend!