Category — Appraisal Stuff

There is no escaping property taxes, right?

According to the Sacramento County Assessor, “An “escape assessment” is a correction to a property’s assessed value on the local property tax roll. The correction is made because the Assessor’s Office discovered a property or a taxable event that should have been assessed but was not. Current and/or prior year tax rolls may be affected. The most common reasons for an escape assessment are overlooked or unreported new construction, a missed change of ownership… or the removal of an exemption.”

Why am I talking about escape assessments? I just finished up some property tax consulting work for an East Sacramento home owner who needed research for his property’s value over the past four years. I love this type of work because it’s exciting to analyze the market for a number of years to establish a value over time. In this situation the owner inherited the property in 2008 from a friend, but the Assessor’s Office was not informed at the time of the death of the original owner, which should have triggered a reassessment. When the Assessor discovered the death and change of ownership, they sent the new owner a “Notice of Proposed Escape Assessment”, which basically means the Assessor’s Office enrolled new assessments for the property for the past four years. The home owner can appeal the values within 60 days of the issuance of the notice. Since the owner disagreed with the value put on the tax roll by the Assessor for 2008-2011, he hired me to show what market value was during each of these respective years.

NOTE: In situations like this the owner can appeal property taxes for multiple years in the past, but that’s not the case in typical “decline in value” situations. If you have been overtaxed for the past several years, for example, but you did not formally dispute your property taxes at the time, then there is nothing you can do once the appeals deadline passes on November 30 of the given year. All you can do is wait until the next year to appeal your property taxes.

Does that make sense? Let me know if you have any questions.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

To give comps or not give comps? That is the question. I met up with Realtor Steve Ostrom last week and we talked about whether a real estate agent should give an appraiser “comps” or not when meeting the appraiser at the inspection. Steve talked about why he always meets the appraiser at the property and I gave some tips for interacting with appraisers around this issue. Due to HVCC, there is still some confusion over whether agents can even talk to appraisers, but they definitely can (just don’t try to pressure for a certain value). Check out the video below (or here). Let me know what you think. I’d love to hear from other agents and appraisers especially. Any questions?

NOTE: In quite a few cases the “comps” provided by real estate agents are really not all that “comparable” to the subject property. It can be valuable when agents share their market insight with appraisers, but my advice to agents is to make sure the sales really are comparable and located in the same market area. This comes back to the difference between a property that is truly competitive / comparable (“comp”) to the subject and a sale that meets a certain price level.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Do chain link fences increase or decrease property value in a neighborhood? I asked this question to some very experienced real estate agents and investors in the Sacramento area, and here is what they said:

Eric Peterson with Praxis Capital: We remove the chain link fences 100% of the time. We do the same to a house with bars on the windows. When buyers see this stuff they immediately think about safety concerns. It’s not the mindset you want to instill in a prospective buyer. If the houses around our target property have chain link fences, we likely will pass on the house. It’s just all about perception and no one wants to make a huge purchase decision while worrying about the safety of the street. 

Jeff Grenz with Erik Berry & Associates 916-425-3228: When I am evaluating homes for investor purchases… If the only home on the street with a chain link front yard fence is the home I’m evaluating, I include a cost to remove the fence, a few hundred dollars…but you can’t remove it from adjacent homes. Landscape and presentation of the subject and adjoining homes impacts the speed of the sale, and ultimately the price. Chain link yells “DISTRESSED”

When I see chain link in the front yard, I start looking for why… where is the big dog? Is there a high crime problem? Is there loitering? Will a potential buyer be asking the same thing and how many will pass by without even looking? I will lose prospective buyers.

It’s an economic decision…. as you lose prospective buyers and narrow your field, it costs more time to sell and you have to discount, both of which devalue the property.

Dennis Lanni with Housing Group Fund: It would not matter to me, but the chain link fence represents what kind of neighborhood it is. It tells me that safety is a concern, sort of like security doors but worse.

Kaleena Amuchastegui with Capri Property Real Estate: Automatically what comes to mind when you mention a front yard chain link fence is a home in an undesirable neighborhood, there is just something about chain link that screams it’s needed to be there to protect a home, not to mention it’s a huge eye sore in my opinion. I think of older neighborhoods that are run-down, I think of areas with higher crime rates… I know that if we acquired a property with a chain link fence around from auction there is a 90% chance we would remove it. I also know we would never add a chain link fence to a property.

Max Boyko with Team Hybrid Real Estate Services: Of course what I think and my investors think can be a different thing, but I would say chain link fences are definitely one of the most unappealing items in a neighborhood. It varies case by case, but primarily my investors would take them out, which I agree with. I wouldn’t say they would pass on a property if it was a good deal, but it takes away the appealing factor and creates a sense of poor security in the neighborhood, which may turn off potential buyers

Please note if you have a chain link fence, nobody is targeting you or saying you’re bringing down the neighborhood. These are simply the opinions of experienced real estate agents and investors. Of course, it may be worth considering what they are saying since they are constantly buying properties to fix and sell on the open market. Clearly they’re in touch with the perceptions of buyers, what makes a difference in property value and the reality of how important impressions are for a neighborhood. If certain elements of fence design give off a negative impression for the community, what can be done about it? What options exist?

If you want further information, I wrote a series last year called “Blight Week” that might provide some more insight into this important conversation. I wrote a previous post that shows a variety of different types of fences and considers the influence a front fence can have on a property. I firmly believe any neighborhood that is experiencing signs of decay has the potential to see better days with a little intention. There is always hope and we can find and experience that together too.

What do you think about chain link fences? Do you agree with the specialists above?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

When an estate has a transfer of ownership due to death or inheritance, a home owner will need to eventually hire a real estate appraiser in order to show the IRS what the reasonable worth of the estate is. So the owner or heir will obtain a “Date of Death” appraisal, which is an appraised value as of the date of the death of the deceased owner.  These appraisals are very commonly ordered within several months of the death of a loved one, but there are three things to consider before ordering the appraisal:

1) Timeline: If your loved one passed away recently and you need to file your taxes very soon, it makes good sense to obtain an appraisal in a timely manner so you can communicate well with the IRS. In other words, if your loved one passed away within six months before you file your taxes, it would likely be prudent to order the “Date of Death” (DOD) appraisal within that timeframe. This is the most common scenario I encounter for the bulk of my estate appraisal workload.

2) Alternative Valuation Date: I mentioned the Date of Death (DOD) appraisal already, but the IRS has also made allowances for a home owner to obtain an Alternative Valuation Date (AVD) six months after the date of death of the owner. Basically, if the market has declined in value after six months since the date of death, you can use the appraised value six months later to show your estate has decreased in value over time due to market circumstances. In this option you would need two appraisals, both a DOD and AVD. If the market has been hit hard, this could be a huge advantage for you for tax purposes. Granted, you would pay for two appraisals (use the same appaiser), but the savings in light of a large decline should far outweigh the cost of the appraisals.

3) CPA / Attorney Advice: Make sure to carefully weigh your options and the implications of using a DOD or AVD appraisal. You should definitely consult with your CPA and/or attorney to talk through which options would be most beneficial for you depending on your plans for the property and the implications for taxation based on using a DOD or AVD.

I am familiar with the estate planning appraisal process, IRS guidelines for appraisals, and I also run an estate appraisal website. Please contact me with any questions. I am always very glad to help answer questions and meet a need for property owners in what is often a difficult time of life.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Would it bother you to live next to a high voltage tower? I snapped these photos recently while in a neighborhood in the Sacramento area. You can see these towers are very close to the houses (within 100 feet easily in some cases). While someone selling the property might be tempted to say the house “backs to open space”, the view is clearly obstructed and dominated by the presence of the tower, so any “open space” premium is likely watered-down a bit, right? In appraisal terminology, we’re dealing with external obsolescence, which is a reduction in value caused by an undesirable factor outside the property.

How have you seen buyers respond to a location near a power tower? What do you think is the main turn-off in the minds of buyers? Visual pollution or a potential for health risks due to electromagnetic fields?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Sometimes there really isn’t any value in a house. I’m working on an appraisal right now where the cost to demolish the house looks to be the only ”value” the structure is bringing to the lot. When a house has very poor workmanship, a shoddy foundation, does not conform to current code in any sense and is all around sub-par in quality and construction, it’s not too likely to be a positive contributor for value.

Improved Site – Cost to Demo = Market Value

In a valuation like this I would not just consider the raw land, but also the contribution of value for any other improvements too – namely water and sewer on the site (hence the term “improved site”). But the cost to demolish the property also must be considered in a case like this because a buyer in his right mind wouldn’t pay money for an inhabitable house that is well beyond a reasonable cost-to-cure.

The moral of the story? Just because a house exists does not mean it has value. In so many cases a house can be salvaged, but in some cases a house just needs to meet a bulldozer instead.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Did you try to get a loan or sell a property but had appraisal problems? I hear all the time from real estate agents, home owners and investors about bad appraisals that killed their deals. What can you do about a “low” appraisal? Honestly, not much sometimes, but you can at least write a well-reasoned cordial letter to the lender to ask the appraiser to reconsider the value in the report based on support you offer in a brief letter. I’ve seen some clients have success with the points I explain in the video below when they legitimately do have a “low” appraisal. When I say “low” too, I’m not talking about a value that is lower than the sales price because we all know market value and price are not the same thing. I really have in mind an appraisal that is truly botched and plain bad. By the way, you can read a blog post about challenging low appraisals in case the video is not working for you.

I’d like to hear about your situation with a “low” appraisal and what you did about it. How did the appraisal impact your deal?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Don’t you love unique landmarks? I sure do. While driving on Wilton Road today on my way to an appraisal inspection, I decided to actually stop and snap a few pictures of this “cannon/mining” motif in the front of a property in Elk Grove (literally next to the border of Wilton). I always get a kick out of this one each time I pass by. My lot size is far too small to have this theme in my yard. Well, my neighbors would probably flog me too due to the principle of conformity in real estate. But if I was on acreage…. What do you think?

While we’re on the subject of Wilton, here are all sales in Wilton over the past five years. What do you see? Does anything stand out to you? The trend in many other areas of Sacramento tends to have a much sharper decline, but that’s less of the case here. What makes Wilton different in your mind? If you live in Wilton, what do you find desirable about the community?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

What is a firewall? Defined by Wikipedia, it’s ”a fireproof barrier used to prevent the spread of fire between or through buildings, structures, electrical substation transformers, or within an aircraft or vehicle.” The firewall shown below is a standard one found between a garage and a house as this wall serves to help stop the spread of fire. Do you see a problem with this firewall though?

The cost to repair the large hole is very minimal, but it’s still a safety issue for occupants, which means it is something that needs to be repaired for an FHA loan. I’ve actually seen this issue twice in the past month on investor flips in the Sacramento area, so clearly it’s not something that is being cured every time by sellers before the appraiser heads out.

Here is a photo of a “before” and “after” of a firewall breach. Have you seen a hole as such cause problems before in a house? Might rodents be able to get into the house this way too? Can you think of any other issues this might pose?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

If you know anything about FHA loans, you’ve likely heard the phrase “health and safety”. That’s because FHA has requirements for a property to be safe and sound for occupants. I shot the video below at a recent inspection. While it may not be a “health and safety” issue if a stair railing has a tiny wobble, this rail is definitely ready to give at some point, which means it’s an obvious safety issue that needs to be addressed before the loan can close. One interesting note is that the listing agent said some of the potential buyers for this property actually backed out in light of being turned off by the wobbly staircase. So on top of being an FHA issue, it’s been somewhat of a deterrent in the market too. See a previous post if you’d like to read about the 10 most common FHA required repairs.

Any thoughts or questions?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

If you’re not famliar with the appraisal process, I hope this post can help you know what to expect during an appraisal inspection and how you might prepare for the inspection too. Sacramento Realtor Doug Reynolds interviewed me recently in the video below to get some tips for buyers and sellers. You can check out a more extensive list in a previous post entitled What Should You do Before the Appraiser Comes? Let me know if you have any questions, fears or stories about an appraiser coming to inspect your property. You can give me a call or send me an email.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Realtor Doug Reynolds interviewed me a short while ago about the impact of distressed sales in a neighborhood. How do short sales and foreclosures impact the real estate market in the Sacramento area? Here are some thoughts in a one-take video interview. For specific statistics, check out “Dear Doctor, how healthy is the real estate market in Sacramento?” and “What happens to foreclosure when prices go up?” I found the data in both of these posts to be very interesting. Enjoy.

Any other insight or thoughts about the affect of distressed sales?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.