Transcript:
Hey there, it’s Casey Denman from TaxSaleAcademy.com and welcome to our weekly question segment. This week’s question comes to us from Luka.
His question or actually a comment maybe . . .
I heard we could use tax assessments as a quick way to value a property.
So it’s pretty important that we address that – before we do so if I do want to remind you viewers that you can get a free copy of The Tax Sale Playbook shipped to you if you cover the nominal shipping cost by going to TaxSaleacademy.com.
Alright, so using tax assessment as a quick way to value property. So, a little of the back story for those brand new to tax sale investing. So obviously, as an investor, we need to know the value of a property. That means we need a way to figure it out, right? More on this in a second.
The tax assessed value of a property is the value used by the county for taxation purposes. Basically they send an employee out, he makes a few notes and then goes back to the office and established the taxable value. This value is multiple by the millage rate and then you have your tax bill. That’s the basics behind it.
So, can we just use this number as the value for determining how much a property is worth and subsequently to figure out how much to bid on a property? The short answer is no.
Those tax assessments are often very cursory and in some cases, such as vacant land, drivebys are never really performed. Instead they group all lots as the same value. Those same assessments might also be based on an entirely different set of rules, such as a percentage of fair market value opposed to full market value. We must also remember that the assessments might be one of ten thousand performed by that county employee, so attention to detail might not be all that great. And lastly, what if that assessment used the value from last year when the property had a house on it . . . that has since burned down?
The proper way to establish value is by performing your due diligence so you know exactly what the property consists of, then using verified comparable sales, which can easily be obtained from county records and many other places online and based your valuation off of numbers you know are accurate. Never trust someone else’s number when you can easily come up with your own!
Hopefully this answered your question Luke. If you have a followup question or anyone else watching has a question feel free to leave it down below under this video or any of our videos here on youtube.
And as always, check out TaxSaleAcademy.com to grab a copy of your free book or if you’d like to take advantage of the most detailed and step by step training we offer thorugh The Tax Sale academy. See ya next time!