county appraisal accuracy

General Real Estate Investing
1

First off, I want to buy distressed properties, rehab, and then flip them. I get the addresses of several distressed properties and then search them on the county appraisal district website, from there I am able to get an appraised value.

Question: On average how much does your offer differ from the county’s appraisal?

2

TxFarmer;

In my state (NJ) the appraisals are for property tax assessment purposes only and
rarely have any connection at all to market value. Often, the appraisals are ten years old or older, depending on when the town where the property is located last conducted appraisals. Even when the apprasals are relatively recent, it often takes 2 years to get the new appraisal data into the public record. In an area where appreciation was 15% per year over the past several years that is a minumum of around 30% off market value.

Any particular appraisal could vary from maket value by 100% or more and often do.

You might be better off researching the sales figures of similar properties in the area where the property is located to get a better feel of market value. In NJ, sales figures are included in the county records as well as appralsed values.

The general rule of thumb is that your offer should be around 70% of market value and then subtract funds needed for repairs to arrive at a final offer value. However, each property, situation, and investor, is different and you should adjust the rules of thumb to fit your personal circumstances.

jmd_forest

3

How accurate is anything that has to do with the government?

Try www.zillow.com call an appraiser ask him for comps then get a realtor to also pull comps add all of those plus your county appraised value divide by four and that is pretty close.

Hope this helps.

     Robb
4

jmd-forest,

How is the 70% calculated? I’m a newbie and learning how RE investments work.

Thanks for your reply

5

offer price = (market value x 0.7) - repair costs

The tricky part is accurately determining market value and repair costs. This can be more critical with lower priced properties where there is less gross profit margin.

Again, this is just a rule of thumb and each property and investor is unique and the rule should be adjusted as necessary to make sure you are comfortable and profitable.

jmd_forest