Since the real estate market took a downturn, some people have complained they couldn’t buy, sell, or refinance a home because an appraiser used bank-owned (REO) or short-sold homes as comparables in the valuation process, which dragged down the value of their home. While using REO and short-sold properties can lower the value of a home, some homeowners are upset that their county assessor will not use these properties as comps for their property taxes.
- In California, some assessors will consider distressed sales when looking at comps, but it varies widely by county, neighborhood, and house. In general, assessors will always look at non-distressed sales first and if there are enough, disregard REO and short sales. However, if there are not enough standard sales, or the home is in an area dominated by distressed sales, the assessor likely will take these properties into account.
- Under Proposition 13, property is assessed upon a change in ownership at its fair market value. That is usually the same as the sale price. However, with distressed property, the sale price may not equal fair market value.
- Between changes of ownership, assessors can raise values only by an inflation rate, not to exceed 2 percent per year, plus the value of major improvements or additions.
- Under Prop. 8, owners who think the market value of their property has fallen below its assessed value can ask for a temporary reduction to the fair market value.
- Homeowners who think their homes are worth less than the assessed value can usually ask their assessor for an informal review. If they are still not satisfied, they can file a formal appeal with their county’s assessment appeals board by Sept. 15 or Nov. 30, depending on the county.
Can’t make your mortgage payment?
Consider a short sale, you may getting moving costs and more!
John J. O’Dell Realtor® GRI