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Discussion Starter · #1 ·
We've found a little farm I'd like to buy, but the asking price on it is $140,000 higher than the tax assessors fair market value. There are out buildings, but they all need new roofs, new siding, and doors, some large doors on tracks. My husband says some of them need torn down due to improperly poured foundations (as indicated by a large crack in one of the concrete block walls).

The house needs new floor boards (to get rid of the cat urine odor), carpeting, updated kitchen and baths, and the center of the house appears to have sunk toward the middle, there is an obvious 'lean' in the kitchen/dining room area due to the sinkage. It also needs wiring upgrades from fuse box to circuit breaker, the furnace is oil, and it doesn't appear to have a water softener (needed because of very high lime/iron content of water).

It's on nine acres, with a year-round stream running through with a good current, four acres are currently farmed - in corn this year, 1 acre of lawn, the rest pasture overgrown pasture with some woody/brush overgrowth, buildings or unusable due to setback requirements of the stream. It has some fruit trees, grape vines. It's conveniently located commute-wise due to a new expressway going in less than a mile away in the next few years. But yet it's smack in the middle of lands reserved for agricultural uses in regard to county planning.

In essence, it needs a lot of work. My husband isn't crazy about getting a fixer upper. But if we could nail this down at a lower price than what our current property is worth (according to tax records) it would be like a free business opportunity now and during our retirement years.

My questions are thus - -

How would you handle making such a lowball offer that appears to be much more realistic than the owner's asking price? Is my assumption wrong, in that going off the current assessed value x 3 is not an accurate value to offer? Typically, our assessed value x 3, we could sell our property for more, but lately homes like ours are selling for $40,000 less than our current assessed value indicates if fair market.

How would you generate the numbers to make an offer?

Also, the tax records indicate there is an error on the deed. I haven't yet investigated to see what that's about, but it apparently is something that would affect the tax rate/assessment if they're noting it in the comments section.
 

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Discussion Starter · #2 ·
Is the price they are asking close to what other properties in that condition have sold in the area nearby? Check at the court house.

If you want to lowball the price, do so to what you think it is worth and go from there. They can either say yes, or no, or counter offer. If the price is very low, then they may not wish to work with you at all if you have insulted them.

Tax assesments are most often not acurate but much lower than the property value. Of course this again depends on what state and what area.

Rose
Heh. Tax records are all over the board right now - no explanation needed. That's just it, I don't want to insult them. But homes in updated condition, with out buildings in updated condition, with more usable property are asking $20K to $70K less than these owners. Anything with a reasonable price on it is selling. Anything in the stratospheric range - like this place, is sitting on the market. They've had it on the market for 6 months with NO offers. The agent commented they're willing to negotiate the price a bit.
 

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If you want to make a "Low Ball" offer, go ahead BUT, don't think for a minute that the assed tax value has anything to do with it. It does not. At best it is just a number used to set taxes, and usually assessed by college students.

Now if you want to know what the property is worth find some recent comparable sales, and compare. That is what the appraiser will do.:cool:
 

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Property tax asessments do not always relfect market value.

IMO,if your husband is not crazy about a fixer-upper, buying, what is essentially a dump, would be a deal breaker, from the get-go.

I would value the entire property on the land value only.
 

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Discussion Starter · #5 ·
If you really like the place, get it appraised. Then you will know what it is worth and what they will be able to sell it for to anyone needing finance on it.

It's a small cost compared to the $$$ you could be out if you pay too much.

Rose
That's a splendid idea. Why didn't I think of it? :bash:
 

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Assessed value x 3?? What? You've got to be kidding! Your county must really low ball their assessments.
I'm fighting with my county because they assessed my house (and everyone elses in the area) 10% higher than what similar houses are currently selling for in the area.
 

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When we made the first offer on the place we own now, it was $175,000 less than the asking price. The sellers were insulted and were pretty nasty about it. But hey, they were asking too much, and they had had no offers. It took 6 months, but we eventually got them to accept an offer which was $125,000 less that their asking price. I still think we may have overpaid a bit, but we really wanted the place and that was what it took to get the sellers to budge.

Ditto what was said earlier about getting an appraisal done.
 

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Discussion Starter · #8 ·
When we made the first offer on the place we own now, it was $175,000 less than the asking price. The sellers were insulted and were pretty nasty about it. But hey, they were asking too much, and they had had no offers. It took 6 months, but we eventually got them to accept an offer which was $125,000 less that their asking price. I still think we may have overpaid a bit, but we really wanted the place and that was what it took to get the sellers to budge.

Ditto what was said earlier about getting an appraisal done.
Someone who frequently gets killer deals in RE advised me to lowball regardless of what it was worth. His opinion was - you need to get the insult out there first, and then you can start to bargain.

Your experience seems to mimic his advice.
 

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Discussion Starter · #9 ·
Assessed value x 3?? What? You've got to be kidding! Your county must really low ball their assessments.
I'm fighting with my county because they assessed my house (and everyone elses in the area) 10% higher than what similar houses are currently selling for in the area.
We're taxed on 33 1/3% of fair market value. Right now it looks like our property is over assessed by 25%.
 

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Assessed value x 3?? What? You've got to be kidding! Your county must really low ball their assessments.
I'm fighting with my county because they assessed my house (and everyone elses in the area) 10% higher than what similar houses are currently selling for in the area.
I trade properties a lot around here. I don't know if this is standard everywhere, but our assessor sets a value of 2/3 what they consider to be the fair market value for tax purposes. Therefore, a parcel that you would expect to sell for $15K will be assessed by the county at $10K, if the property has been assessed lately. We're on 3-year assessment cycles here.
 

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That's a splendid idea. Why didn't I think of it? :bash:
If you are going to get financing, talk to your lender and see who their approved appraisers are and use one of them. That way, if you do come to an agreement on price and get this under contract, you won't have to pay for another appraisal when the lender needs one. You still might have to pay a nominal fee for the appraiser to draw up a new appraisal with your lender as the client rather than you, but it is still cheaper than paying for two.
 

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Investigate the deed error, first. Chances are, it is something simple, but if it is more complex, it could cost months or years and a lot of $$$$ to fix, and you probably will not be able to get a mortgage until the error is fixed. Or you might be able to get one, but not from a company that you want to do business with.
 

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Discussion Starter · #13 ·
If you are going to get financing, talk to your lender and see who their approved appraisers are and use one of them. That way, if you do come to an agreement on price and get this under contract, you won't have to pay for another appraisal when the lender needs one. You still might have to pay a nominal fee for the appraiser to draw up a new appraisal with your lender as the client rather than you, but it is still cheaper than paying for two.
I was operating under the assumption that lenders would accept any appraisal that had been done within one year of the loan. Maybe that's changed recently, but when we refinanced a few years back, they'd ask if we had a recent appraisal already done.
 

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Discussion Starter · #14 ·
Investigate the deed error, first. Chances are, it is something simple, but if it is more complex, it could cost months or years and a lot of $$$$ to fix, and you probably will not be able to get a mortgage until the error is fixed. Or you might be able to get one, but not from a company that you want to do business with.
This is on my list of phone contacts to make tomorrow morning.
 

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I was operating under the assumption that lenders would accept any appraisal that had been done within one year of the loan. Maybe that's changed recently, but when we refinanced a few years back, they'd ask if we had a recent appraisal already done.
No, there are some mortgage companies that won't deal with certain appraisers...Kinda like a "blacklist."
 

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I was operating under the assumption that lenders would accept any appraisal that had been done within one year of the loan. Maybe that's changed recently, but when we refinanced a few years back, they'd ask if we had a recent appraisal already done.
At the moment a year old appraisal is about as valuable as whatever is currently stuck to the bottom of your shoe. I just talked to my finance guy at Wells-Fargo. He said they are running into occasional requests for a second fresh appraisal, from a different appraiser, on some loans. Banks are leery of current info. much less outdated stuff. Things have fallen so fast here that a year old valuation could be off by 40% in some cases.
Given your description of the property and your opinion that it is grossly overpriced, I'm not sure why you are even considering it? Why plague yourself with a lot of work that could be avoided by finding a better opportunity?
 

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Pickapeppa,

I wouldn't worry about whether the seller is insulted or not. Focus on the value of the property to you and what the market appears to be. Look at comparable sales.

I'm currently looking at a farm property near our farm and if we make an offer it will be significantly below the current asking price and the price was recently dropped significantly.

Without meaning to insult, in terms of valueing farms, I wouldn't consider the property you describe as a farm. At least in this area, farms are valued on a per acre basis depending on the type of land involved. Land for row crops is valued differently than pasture, etc. For a farm of any size, the house and barn (unless they are new) are probably not the major consideration.

One thing to consider in todays market is that in the early 1980s farm prices in quite a few areas dropped by as much as 75%. I don't see anything near that bad but I do see pressure on prices.

Mike
 
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