Sacramento Appraisal Blog

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Three consecutive years of lowered property taxes!!

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It’s always nice to get unexpected money in the mail, right? Sacramento County recently cut me a check for the third consecutive year after I disputed my property taxes. The grand total this year is not substantial like it has been for some of my clients, but I’ll take a check for $310.41 any day of the week. Over the past three years I’ve had a tax refund total of $1,158.39. Not too shabby considering I would’ve never seen this money had I not appealed.

How should I spend the refund? A few HP Touchpads? Or maybe that bill from an ER trip after my son’s bike accident?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook or subscribe to posts by email.

The market under $50,000 in Sacramento County

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Looking to buy under $50,000? Let’s take a look at all sales in Sacramento County over the past 36 months under $50,000 (SFR only – not condos). There were 1615 sales under $50,000 during the past three years. As you can see below, there were more sales under $50,000 during the first year on the graph (55% from 2008-2009). That’s a good sign for the real estate market, right? There have been very few sales under $20,000 over the past couple years, which is also good. Most sales at that level are severe fixers, fire-burned or they are priced low to offset the out-of-pocket code enforcement costs that investors have to pay (like this house).

What’s for sale these days under $50,000? There are over 180 properties listed below $50,000. 105 of them are already either pending or “contingent” in status, which means a contract is already in place. The lower end of the market is very competitive, so if you are looking to buy up properties at this level, you need to have cash, be quick, work with the right agent and have connections (or all of the above). If you need suggestions for a good agent, contact me.

By the way, the lowest-priced active listing at $18,000 is located on 24th Avenue in the 95820 zip code (the lowest pending is at $16,100). This is a fire-burned property and it’s bound to be snatched up quickly. I wouldn’t be surprised if there were already multiple offers since it’s been on the market for 4 days now.

If you’re local, what are you seeing happen in the market under $50,000? How hard is it to get into contract? What gems would you like to find in this price range?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook or subscribe to posts by email.

Why do appraisers give such little value for square footage?

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Why do appraisers sometimes give such little value to something as important as square footage? It’s crazy that an appraiser gave $10,000 in value for 300 square feet, right? Maybe you’ve felt this way about an appraisal on your home or for one of your listings. Give me a minute to help clear up some of the confusion by explaining how appraisers are supposed to come up with value adjustments for house size.

Example 1: A Typical Size Scenario

Real estate appraisers should be giving value to square footage according to how the market sees the square footage. What does that mean? While it may cost $40,000 for a 400 square foot addition, based on an analysis of comps in a neighborhood, the appraiser might determine properties with an extra 400 square feet sell for $20,000 more than houses without that space. This means the market in this particular neighborhood really only rewards $20,000 in value for the size difference. This example of course assumes there are no other factors to consider such as lot size, location, upgrades, room count, financing etc….

Example 2:  The McMansion Mega House

Imagine your house is 6,000 square feet in a neighborhood where the largest model is 4,000 square feet. Do you think the market is willing to pay 50% more for you house because it is 50% larger than the 4,000 square foot model? Probably not. There are situations where the market is actually willing to pay very little or nothing for the extra square footage because it’s considered an overimprovement (or “superadequacy” for the fancy term). This can be very upsetting for home owners and agents, but the appraiser is not being mean or ruthless, but only interpreting the market properly (hopefully).

This is important to understand for the following reasons:

  1. Cost vs. Value:  Appraisers do not give value to square footage based on construction costs, but rather the reaction in the marketplace to extra size. Think of it in terms of a kitchen remodel or pool. Just because a kitchen costs $75,000 to remodel does not automatically mean you’ll see $75,000 in value in the resale market. Or while a pool may cost $35,000, resale value will very unlikely include the total cost of the pool. Cost does not always equal value.
  2. Additions & Conversions:  An addition or garage conversion may not always put your house on par with other larger houses. There are many factors to consider when it comes to valuing an addition. It’s important also to know the neighborhood before planning a huge addition because you don’t want to overbuild for the neighborhood.
  3. The Largest House:  Larger houses tend to have an overall lower price per square foot than medium-sized houses, so applying a straight cost-per-sqare-foot for the neighborhood may not yield credible results for the largest house.
  4. Big New Construction Premiums:  If you buy a newly constructed mega-house like in Example 2, you will likely pay a big premium for the extra square footage during the sale, but you may not see this premium again when reselling.
  5. Real Estate Agents:  Agents who know the local market and how appraisers should look at square footage will be able to coach and resource home owners about the process and what to generally expect.
  6. Unique Neighborhoods:  Each market is different. There is no standard price adjustment for appraisers to make because buyers in one area may be willing to pay more or less for size compared to another neighborhood.

All things considered, it’s not always easy to swallow that a big difference in square footage does not always translate into big value. Let me make it clear too that just because I explained how an appraiser is supposed to give value for square footage does not mean that the appraiser actually did that.

Any insight, questions or commentary? In appraisal reports you’ve read, how much value do you see appraisers give for square footage? I’d love to hear your comments.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook or subscribe to posts by email.

What happens to foreclosure when prices go up?

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When prices increase, what happens to the rate of foreclosure (REOs)? Let’s take a look at price range segments under $500,000 in Sacramento County to see what we might discover. What stands out to you from the chart below? Generally speaking, the higher the sales price, the lower the percentage of foreclosure. There seems to be greater success with short sales at higher prices too, though the stats look pretty decent above $100,000. Does it shock you to see 83% of all sales under $100,000 as either bank-owned or short sales? Lastly, the total percentage of distressed properties consistently declines as price increases. What does that tell us?

Let’s look at all counties in MLS also to see if we might see a similar trend. It’s always nice to compare one set of data with a larger set as a safeguard. Counties in Sacramento MLS consist of Sacramento, Placer, Yolo, El Dorado, San Joaquin, Stainslaus and portions of Merced, Yuba/Sutter and a few other places.

What stands out to you? If you are a real estate agent, what are you seeing out there in the market? I’d love to hear your thoughts. Feel free to comment below.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook or subscribe to posts by email.

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