Raising Perceived Value

I had a professor in B-School who at the end of a class session would, as students began coming to the conclusion that he wanted all along, remark, “I love it when a good plan comes together.” Well, I feel that way today. On March 17, I posted a blog on tax assessments and relative value / perceived value. I argued that sellers should fight with the County / City to raise their assessed value when they go to sell their house as this will provide a higher baseline. County of Albemarle - GIS-Web - Property Information.jpg

Well, I have a reader who did just this. Perhaps they are not a reader, but I found a listing this morning where this has happened. Look to the right at this copy from their assessments, and I’ll go over what has happened.

So, here is a very nice home in Western Albemarle that was assessed in 2007 for $924,500. In 2008, that assessment dropped to $899,800. Along with the overall market decline in 2008, the 2009 resulting assessment dropped another $39,000 to $860,000.

Enter the owner who wishes to sell his home. I contacted the assessor to ask what “Appraiser’s Review” meant. According to the assessor, the notes in the computer stated that the “owner contacted the assessors office and stated that they believe that the property assessment did not reflect a high enough value.”

Wow. They keep records of why appraiser’s reviews take place. Even better for my purposes. The new assessment reverses two years of declining real estate prices. The new assessment was valid as of Feb 13, 2009 and was entered at $927,600.

On March 4, 2009, the house goes on the market for $1.125 mm. Now, that is still priced at a 21% premium to the tax assessment. Pretty aggressive. But if you go back the official County of Albemarle assessment, we are now 30.7% premium to tax assessment.

Personal thought: neither will fly. BUT… 20% over tax is certainly better than a 30% premium. And if other agents don’t really look through the history of the assessment, they may not even notice the change.

A note to the readers. In the City of Charlottesville, there are no history files available on assessment values for real estate. Only the current assessment is on line. You can contact the assessor’s office and they will give you the historical numbers, but their on-line information does not have the ability to display the history.

If any readers see additional homes like this, let me know, and I’m happy to look at the process.

MLS Fields

In real estate, our clients expect that the information we provide will be accurate. They want it in a timely manner, and they want all the information in a one-stop shop. Sometimes, however, the information that we have in our MLS is not really correct.

A quick run down on some items that may or may not be right, and what we are doing / trying to do to fix it.

Days on Market – A number of years ago, it was a common practice among some agents to withdraw and re-list properties on a regular basis (every 25 days or so). A look back to 2006 real estate will bring up several homes that have as many as 6 MLS Numbers. Most good agents knew to check the history of the property and tell their buyer clients, but the practice continued. The number one reason to do it is that the property would pop up on all agents’ hot sheets and would go out to prospects on automatic e-mails nightly. Well, we haven’t stopped it entirely, but we have done a good bit to slow it down.

Enter CDOM or Continuous Days on Market. This little ticker can’t be reset. So, even when a property is withdrawn and relisted, or even listed by a new broker at a new firm the CDOM keeps on counting. There is no hiding how long a home has been listed. I have seen agents who attempt to add an apartment number or other identifier to get rid of the CDOM, but almost always other Realtors report the violation, and it is fixed.

Tax Assessments – So, here’s a good one. I was able to buy the tax records for the city and was able to match most of the current listings with records fairly easily. Not 100%, but it was possible. A little more time and effort and I could have it. But, at CAAR, we don’t have the resources to match the data within a reasonable amount of time. So, the city tax records in CAAR are several years old. The County tax records are from 2006. There is no real reason why we can’t get the taxes to match up. We need to train our agents better to use parcel ID for their properties. This would provide a fool proof way of matching the records.

Square footage – This is the one that drives me crazy. A client calls and says they would like a 2500 square foot house. You find a home in the right school district in the right price range but with no photos. When you arrive, you find a 1500 square foot ranch with a 1,000 square foot basement. This is not a 2,500 s.f. home, even though it might be technically. We rely so much on the data from the MLS, but we have no way of separating out above grade and below grade square footage. This is currently being examined by the CAAR Tech Committee, although I don’t know yet what direction we will head. I hope that we will see three fields. Above Grade Finished Square Footage, Below Grade Finished Square Footage and Unfinished Square Footage.

GE Supra eKey – This isn’t bad data, it’s no data. For every house in the MLS, there should be a lock box. (There are exceptions, but not many.) Every time an agent opens up one of these boxes, the information is stored at GE, and at our CAAR offices. I want to see a weekly number of how many boxes are opened every week. The actual number is irrelevant, but the trend would be amazing to watch. If Contingent and Pending sales are an indication of upcoming sales, then Supra eKey box openings are a harbinger of Offers, and thus contracts, and thus sales. This is the greatest indicator that consumers should want to see, and should be screaming for.

City Assessment Data – Part 1

Originally Published February 5, 2009

Ever since I wrote a few days ago that it bothered me that I didn’t have on-line access to my city assessment history, I have been fixated on this. To the point that yesterday, I went and plopped down a check in the City Assessor’s office. In return they were kind enough to sell me a CD of 2008 and 2009 data in Access form. I have had to re-establish a broken relationship with my PC as the Mac is simply not a data friendly machine. This relationship is taking time to mend, but I’m getting there. This study has about 10 points, each of which will need to be its own blog post, so I am going to see if I can get along with my PC long enough to put it down the first bit for you now. Read on…

First things first, as you can imagine, fields are not the same in the MLS as they are in City taxes, so that fouls things up. Secondly, the terms used in the MLS are not the same as in the City records. So, for a house on Alderman Rd, the MLS records read “ALDERMAN RD (CHARLOTTESVILLE)” if you are lucky and the taxes read “ALDERMAN ROAD”. After 7 Update queries of trying to fix all the issues, I still never got any records to match up when the street name was a number. So a small disclaimer here. Of the 337 detached home transactions in Charlottesville during 2008, I was only able to create complete records for 284 of them. Still, a pretty good percentage of the whole.

First off, lets talk about accuracy of data.

Of the 284 listings, 78 times, the Realtor who listed the property stated that the house has more square footage than the tax records. This can be answered for four reasons.

  1. The tax records do not reflect homeowner additions / improvements. In this case, most of the time, a homeowner has finished a basement or a garage and has not reported it to the City.
  2. The homeowner disagrees with the City. I had a listing last year in which the sunroom had heat and was a finished space. The attic was finished but was not listed in the taxes as square footage. We had a licensed appraiser come out and measure the space who found that the ~2,400 s.f. house was actually over 3,000 s.f.
  3. The homeowner provides information to the agent that is incorrect.
  4. Math error.

Of the 284 listings, 148 had the same information as the tax records.
But here is the crazy part: In 58 listings, the Realtor listed LESS square footage than the tax records. I am sure that there are some reasonable explanations here, but I’m not sure that any of them can be used to explain misrepresenting a home. How does a seller benefit from having their square footage understated in the MLS? In more than a handful, I noticed that the Realtor had not counted square footage in the basement, and instead reported the above grade square footage. (More on this in another post.)

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