Homeowner denial: My home is gaining value

[jeffrey]

The housing market may have gone bust, but many homeowners are still living in a bubble.

Despite dismal housing headlines and reports showing falling prices nationwide, owners in some once-hot areas still believe their home is gaining value or at least holding its own. And by hanging onto too-high expectations, sellers are unwittingly keeping the market from finding a bottom.

Real estate professionals across the country are reporting difficulty convincing sellers the true market value of their homes...

Homeowner denial: My home is gaining value - Economy in Turmoil

[disneysteve]

My mom had this problem when she sold her house. She kept focusing on what houses were selling for 6 months or a year prior to her putting hers on the market. She didn't want to cut her price to what homes were then selling for, which was 10-15% less than the peak. Eventually, after a few price cuts, the home sold, but it was on the market for 9 months.

[momof1in150]

As a REALTOR I see this all of the time. A lot of houses here are priced as if it was 1-2 years ago and they are not selling. Home owners are looking at what they think it should be listed for and it is sitting on the market for months.

Most recently I had a buyer put in a bid for $470K for a home and the owner wouldn't go down lower then $535K. This is a house that has been on the market for 2.5 years. It is assessed at just over $500K and needs a lot of updating. He thinks that he will get his $535K but I hate to say it but he is sadly mistaken.

[JinCO]

I agree that many people are a bit delusional when assessing the value of their home, but I don’t think this is necessarily a bad thing. If more people accurately assessed the value of their homes and determined that they were under water it might cause them to walk away thus increasing foreclosures. As long as people do not need to sell it doesn’t matter what they think their homes are worth. If people do need to sell, I am sure this phenomenon is frustrating for the real estate agent.

[disneysteve]

Originally Posted by JinCO

If more people accurately assessed the value of their homes and determined that they were under water it might cause them to walk away thus increasing foreclosures.

Why? If someone didn't need to sell and was not having any trouble making the payments, why would they walk away? The value of the home is irrelevant if you are going to continue to live there. The value only matters when it comes time to sell it.

[JinCO]

If someone owed $300K on something that was valued at $200K, I could see some people walking away from the home because they feel like they are throwing their money away. I saw something on the Today show this morning where some people in Florida were buying new homes and then walking away from their current home that was under water. If this same person was in denial and thought the home was worth $280K, there is no incentive to walk.

[disneysteve]

Originally Posted by JinCO

If someone owed $300K on something that was valued at $200K, I could see some people walking away from the home because they feel like they are throwing their money away.

That's pathetic. Obviously, they thought it was worth 300K when they bought it. What difference does it make what the current market value is if you aren't selling? I just can't comprehend people thinking that way. They bought it and signed a legal contract to pay for it. If they walk away, they should be prosecuted.

[PrincessPerky]

So umm...if my house isn't 'holding it's own' how come I'm paying taxes as if it was?

[disneysteve]

Originally Posted by PrincessPerky

So umm...if my house isn't 'holding it's own' how come I'm paying taxes as if it was?

Have you filed an appeal for your taxes? If you can show that you are being taxed on an appraised value that isn't realistic, you should be able to get your taxes lowered.

[PrincessPerky]

Well I guess I just never thought about it, but last week we got the tax notice (no appraisal by them just same as last year) how would I know what my house is really worth anyway?

[momof1in150]

Originally Posted by PrincessPerky

Well I guess I just never thought about it, but last week we got the tax notice (no appraisal by them just same as last year) how would I know what my house is really worth anyway?

The best way to find out what it is worth is to hire an independent appraiser. A Realtor can give you a close price but an appraiser is what a bank would you. Your taxes are based on the assessment of your property and the town/city has to reassess taxes every so often (usually a set time but each town is different). Our town's assessments are listed online so it is easy to see what the assessor thinks that your house is worth.

Housing prices (in RI) have gone down 20% over the last 13 months so most houses aren't worth what they were a year ago. Towns aren't going to reassess every year as it costs a lot of money but you can file an appeal if you think your house is worth significantly less then what they list.

[kork13]

Originally Posted by momof1in150

Our town's assessments are listed online so it is easy to see what the assessor thinks that your house is worth.

If your town doesn't do this, you should be able to call your local government offices (sorry, I'm not entirely certain what department) and request their assessment of your property's value.

I know that appraisers charge some sort of fee (can't ballpark it myself), but depending on how much you expect your home value has gone down, the tax savings may be worth the cost. Get cost estimates and crunch some numbers--it may or may not be worth the cost/effort.

[PetMom]

I know that the inflated real estate values are what some people are paying their property taxes on.

The bigger, more expensive the house the larger the tax base is.

We have remained in a tiny house that is considered very low cost - but for some of those in the houses that are over the $250,000 mark - a flucuation in value of $50,000 that you are paying taxes on could add up.

The article or new story about this pointed out that cities were slow to give up these larger tax payments from homeowners.
Also as one poster mentioned it is a cost to go out reappraise and cities are cutting back on expenses.

[PetMom]

I think it would be interesting to find out by calling the tax assessor if a true value of a home (market value - what one actually sells for without it being a distress sale) would be all you need to get your property taxes to the right level of what you should be paying.

If they require an independent appraisal (which would be ideal) then that would keep a lot of people from appealing (or demanding) for lower tax.
The cost alone of an appraisal would wipe out a lot of appellants.

But, if a person has a figure for what a house sold for next door - I wonder if that would be enough.

Interesting topic that is costing a lot of people dollars they don't have.

[disneysteve]

Our town actually works differently. Our tax appraisal hasn't changed since we bought the house over 14 years ago, but they do periodically raise the tax rate, so taxes go up because of that, not because of value appreciation of the property. It would be stupid for me to contest my appraisal because the house is worth double what it is appraised for.

[jIM_Ohio]

Originally Posted by PrincessPerky

So umm...if my house isn't 'holding it's own' how come I'm paying taxes as if it was?

Real estate is always local. In our area properties were selling for higher values in Q1 of 2008. Our 2008 appraisal (as of 1/1/08) was 60k higher than it was in 200 when we bought the house.

In Q2 the bubble finally popped in Ohio in our county. I had to appeal the 2008 appraisal to get the value back in line with market.

When taking on the appeal process I learned quite a bit. We have appraisals every 6 years- where someone comes out, looks at property and that review is also correllated to recent home sales. At the 3 year mark in between sales trends are reviewed by the county auditor, and a straight line adjustment is made (if similar houses are selling for 4 percent more, then my appraisal goes up 4 percent).

6 years is a detailed appraisal with an adjustment at 3 year point for sales trends of prior 3 years.

In addition school levies are done based on a budget- so if school budget is 6M, then all properties in area collect 6M. If new houses are built it LOWERS my property taxes because the same 6M can now be collected from more taxpayers.