  Ocean2026 Member Username: Ocean2026 Post Number: 12 Registered: 11-2008 |
Unlike most US tax offices the Detroit version doesn't have email and after 30 min hold on the phone I gave up. If one buys a home at an arms length transaction ( ie they see it from a broker they don't know and make an offer etc) and the price is say $200k does that become the new market value for tax purposes? Also if one ever tries ZILLOW they can Guestimate the market value of a house using the address. For Detroit their estimates seem way over market and Ive noticed this in other areas where prices are declining. Any experiences with this and especially with the Tax office? | ||
Quonset_hut Member Username: Quonset_hut Post Number: 21 Registered: 08-2008 |
Your isolated transaction did not move the assessment of your new house or your neighborhood. What you still have is wildly inflated assessments that reflected the run up earlier in the decade (on a lag basis) and will take quite a long time to go down, offset by cost increases that can be used to keep taxes up even as values are falling. That means when you see a nice house that is very cheap for whatever reason, and the taxes are still $5000-6000/yr., that is what you will pay. | ||
Softailrider Member Username: Softailrider Post Number: 233 Registered: 02-2007 |
Or , if you take a look at some houses in the burbs that are huge , loaded with amenities and seem priced at a steal , and then check the taxes and find out that they're over 20,000.00 a year , summer and winter combined. Huge amount of mortgage fraud out there , in the city and the suburbs. Helluva lot of people just took the money and ran. | ||
Novine Member Username: Novine Post Number: 877 Registered: 07-2007 |
"If one buys a home at an arms length transaction ( ie they see it from a broker they don't know and make an offer etc) and the price is say $200k does that become the new market value for tax purposes? " No, at least not by law. Here's a Q and A about that: "I just bought a new house, why isn’t my assessed value one half of my sale price? Michigan law prohibits assessors from basing values on one sale price. We are required to value your property based on the methods used to value other properties in your area. While we hope our value estimate is close to your sale price, it is an estimate and may not be the same as your recent sale." http://www.co.midland.mi.us/de partments/about.php?id=11 Similar questions and answers about foreclosure and auction sales here: http://www.genoa.org/departmen ts/Assessing/assessments%20faq .html In Michigan, home assessments aren't based on your individual sale. Instead, the assessors look at home sales over a 2 year period (or 1 year in some cases) to develop an average that is then used to calculate your home's value. Foreclosure sales, auction sales and similar exchanges are not included because they aren't considered to be representative of actual market values. Because the values are based on past sales, changes in assessments won't reflect decreases or increases in value as quickly as the market itself. Over time, the price that you and others pay will affect the assessed value of the home as declines in the market values of the home are reflected in the assessments. In my area, home values went from increasing to stagnant to falling in a 3 year period. My home's assessed value has followed the same trend. Once a home's taxable value and assessed value are equal, further declines in the assessed value will lead to a decline in taxable value and a decline in the amount of taxes one pays. These changes in values don't happen overnight because the system has been designed to avoid major increases or decreases in property values from year to year. But most communities are experiencing the declines in values and if you have owned your home for 5 years or less, if you haven't already, you will soon see your taxable value decline to the level of your assessed value. Only people who have owned their homes for years and benefited from the cap on increases in their taxable value aren't seeing these decreases. These are the people whose homes are increasing in taxable value even as their assessed value decreases. That will happen until the two are equal and then they'll decline at the same rate. It doesn't look fair to pay more when values are falling but people who owned those homes were often paying much less in taxes than a person owning an equally valued (by assessment) home who had lived in the community for a shorter amount of time. (Message edited by Novine on November 26, 2008) | ||
Ocean2026 Member Username: Ocean2026 Post Number: 13 Registered: 11-2008 |
Thanks- of course that is not good news. I'm not a Republican but I do know first hand that high taxes and a difficult policy discourage investment and can also lead to abandonment. There are a couple of buildings in Detroit that when I recover from my current financial woes, I might like to buy (well only one), but the uncertainty of what the assessment might be is scary. If one can get through on the phone might they tell you in advance? | ||
Ocean2026 Member Username: Ocean2026 Post Number: 14 Registered: 11-2008 |
The other problem is unlike Pittsburgh Buffalo and almost every other place I've looked ( Corpus Christi, El Paso), its easy to see what an assessment is online - usually just a couple of clicks. Maybe Im doing it wrong but it seems like in Detroit one has to have an account and pay for each look. Once again- why wouldn't they want people to be able to research properties? | ||
Lferg Member Username: Lferg Post Number: 49 Registered: 07-2008 |
Zillow will tell you what the 2007 taxes were and will give you the recent sales in the area. If you go to www.cyberhomes.com you can see what the assessed value was for 2007. | ||
7051 Member Username: 7051 Post Number: 182 Registered: 02-2006 |
Ocean, The tax search function on the city web site was free at one time. It is now $2 per search. Michigan also has the prop. tax appeal process. It works. Refer to the State of Michigan website for info. Between NEZ's in the neighborhoods you have looked at and tax appeals, your taxes will be much lower than currently listed. Feel free to email me at detbest@yahoo.com with your no. | ||
Pkbroch Member Username: Pkbroch Post Number: 201 Registered: 02-2008 |
Zillow is way off in valuation and square footage. Cyberhomes is way off in valuation, square footage, and taxable value in my area of Detroit. In one house's square footage they are off by 1,500 sq. feet. Also in most Historic areas in Detroit houses can vary from 2,000 square feet to 13,000 square feet in the same subdivision. Recent sales count for little as the houses are so different as to condition and features. There are houses in Some historic areas that are listed at $ 50,000. but need $ 100,000. www.Realestateone.com has the most acurate listing of square footage and real estate prices. Also.....Heat, electric, water, upkeep, are the real costs here. An eighty year old 6,000 square foot house with high ceilings can cost $ 400-500 per month, or $ 5,000 per year to heat. That's with heat set below 69 degrees. | ||
Brandon48202 Member Username: Brandon48202 Post Number: 241 Registered: 12-2004 |
I value houses for the banks for a living and I can tell you that Zillow is useless. | ||
Swingline Member Username: Swingline Post Number: 1228 Registered: 11-2003 |
The utilization of foreclosure sales in assessment formulas is a hot topic. Assessors will claim that they cannot use foreclosure sales because these are not arms length transactions. But what does arms length mean in this context? One might agree that the actual sheriff's sale price should not be used, but even that could be debated. However, why shouldn't one consider short sales and sales of bank-owned properties to be arms length? In Detroit, of course, many foreclosed homes have been vacant for extended periods. It is not uncommon for these houses to vandalized to varying degrees. When these houses are sold it usually for a price that is less than one-third of what occupied well-kept houses in the neighborhood can be sold. Picture large but stripped Boston Edison houses being sold for $40,000. But regardless of the involvement of the foreclosure process, the final sale price of this house reflects its market value. The new owner of this house should not have to pay current taxes on what his house could be worth if fixed up. He should pay on its true reduced market value. State law requires assessors to consider the condition of an individual property. In order to get a proper assessment though, the new owner of a house in poor condition will probably have to go through the tax appeal process. Local assessors are not going to slash a tax bill by 80% even through a $200,000 mortgage fraud deal in 2006 has been followed in 2008 by a $40,000 purchase of the same house in a vandalized condition. | ||
Brandon48202 Member Username: Brandon48202 Post Number: 242 Registered: 12-2004 |
Within the city of Detroit almost all real estate transactions over the last 6 months were foreclosures, therefore forclosures are the real market value and SEVs should be based upon them. (Message edited by brandon48202 on November 26, 2008) | ||
Croweblack Member Username: Croweblack Post Number: 80 Registered: 02-2007 |
Swingline--Almost positive that a recent state court of appeals ruling required the local assessors to now take into account foreclosures. Can't wait to appeal taxes in the city of detroit--gonna be fun!!! | ||
Pkbroch Member Username: Pkbroch Post Number: 203 Registered: 02-2008 |
Croweblack - It's not gonna be fun with 150,000 of us in line to appeal at City-County after the City of " D ", "D" for dunderheads, sends us our reject letters, after they raise our assessed valuations. Of course then again we could bring beer and grills and call it the Big Detroit tax protest block party. We could also throw the council and the board of assessors into Detroit harbor in protest. | ||
Ocean2026 Member Username: Ocean2026 Post Number: 17 Registered: 11-2008 |
Good discussion! When something is sold at auction or in foreclosure in my opinion its usually AFTER it may have been on the regular market - with a licensed broker offering advice on what the market value was. It didn't sell at that "market" value as most people don't want to admit their property isn't worth near what they think. That's the small picture. The Big picture is that Detroit might have some chance for a revival if its easy and cheap for investors - summer home people to get an architectural gem CHEAP. These investors don't HAVE to buy and if the taxes are too high they wont. The property will then further decay and once abandoned Detroit will not get any tax revenue. | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1469 Registered: 01-2005 |
Foreclosure and auction sales are the ultimate arms-length transactions, should be used as comps, and assessments should be reduced accordingly. Always appeal, at least to the City Council level (or similar appellate body.) | ||
Novine Member Username: Novine Post Number: 879 Registered: 07-2007 |
"Always appeal, at least to the City Council level (or similar appellate body.)" Appeals go to a "Board of Review". More information on assessments and appeals here: http://www.housedems.com/tax-h elp/property-tax-assessment-he lp/ | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1471 Registered: 01-2005 |
In Detroit, the City Council acts as the Board of Review, or at least it used to when I owned real estate in downtown Detroit. | ||
Novine Member Username: Novine Post Number: 882 Registered: 07-2007 |
https://www.detroitmi.gov/legi slative/BoardsCommissions/Prop ertyAssessmentReview/ | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1472 Registered: 01-2005 |
Thanks for the update. Thankfully, I don't have to face these issues any more. The Council used to be pretty amenable to granting relief. I have no idea what the current Board's policy is. Anyway, the point of my post was to appeal to review boards, however they may be constituted or designated. | ||
Parkguy Member Username: Parkguy Post Number: 342 Registered: 04-2007 |
Am I correct that the lien holder in a foreclosure can't sell the property for more than is owed on the mortgage it foreclosed? | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1474 Registered: 01-2005 |
The lien holder doesn't set the price. The sheriff auctions the real estate and it is sold to the highest bidder on the "courthouse steps." Usually, the lender is the only bidder. The lender usually bids in the amount of the debt. The lender may bid less if the value of the real estate is less than the debt, and sue the borrower for the amount of the deficiency if the borrower is collectible. If there are other bidders and the value of the real estate is more than the amount of the debt (unusual), the bid may be higher than the mortgage debt and in that case the junior lien holders, if there are any, get the amount of the overbid; if there are no junior claimants, the owner gets the money. | ||
Soomka1 Member Username: Soomka1 Post Number: 152 Registered: 02-2007 |
I do 15 to 20 "BPOs" a week for banks and I can tell you that ZILLOW is about as reliable as a Magic 8 Ball. Another thing that confuses people right now is that houses aren't selling for their appraised value. The only houses that are selling are priced below market value. It takes a noticeably good price to get someone off of the sidelines and actually make a purchase. | ||
Brandon48202 Member Username: Brandon48202 Post Number: 243 Registered: 12-2004 |
Soomka- I'm doing some right now- they were due yesterday! oh well. | ||
Ocean2026 Member Username: Ocean2026 Post Number: 22 Registered: 11-2008 |
Interesting Soomka - you said the only houses selling are below market - that price however is the new or realistic market. As those sales continue at the lower prices that will become what all believe to be the current market. If demand doesn't pick up that cycle will continue. With a poor national economy and Michigan slated to lose 109,000 jobs next year, the trend should remain downward. Any evidence to the contrary? | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1475 Registered: 01-2005 |
I agree with Ocean. The "market" is determined by the prices of real estate exposed to the marketplace for a reasonable period of time which sells in arms-length transactions. Based on that criteria there is no such thing as a "bargain" in real estate. You're lucky if you get what you think you're paying for. MI is not close to a bottom as far as I can see and the market for real estate, particularly residential, will continue to deteriorate. | ||
Lowell Moderator Username: Lowell Post Number: 5176 Registered: 09-2003 |
Nice education everyone. Thanks. Real estate is such a tough play. It is always deteriorating and is burdened with taxes -- something a bond or a CD is the opposite of. Unless it can be rented for a good price, one can only hope for appreciation to make an money from it. I think it could make a comeback with currency devaluation, something that seems inevitable to me with all the magic dollars be created by federal bailout debt. Zillow? Hit or miss I find. I know Zillow has to be laughable to you pros, but I have found it to usually be close on overall neighborhoods while inaccurate on a lot of individual properties. | ||
Dougw Member Username: Dougw Post Number: 2208 Registered: 11-2003 |
quote: That would be good. I agree that sales of foreclosed properties should be part of the assessments as this point. And most of them are arm's-length transactions... occasionally you will see a shady REO broker sell a property to his buddy at a deep discount, but for the most part, the foreclosure sales I've seen have been listed on realtor.com, etc, and are legitimate. This is now a nationwide issue, for example almost half of Bay Area California sales last month were foreclosure sales: http://calculatedrisk.blogspot .com/2008/11/dataquick-foreclo sure-resales-almost.html Ocean -- Your assessment won't automatically be lowered when you buy the property, but you *can* and should get it lowered by going through the assessments review process that Novine describes. A neighbor of mine purchased a property at arm's length for much less than the assessed value, and he had his assessment lowered halfway to the purchase price, which is what I've heard is the norm. (He could have appealed further at the state level as well to get even closer to the purchase price.) | ||
3rdworldcity Member Username: 3rdworldcity Post Number: 1480 Registered: 01-2005 |
It's important when appealing taxes to have as much ammunition as possible when you go before the assessor, and then through the appeal process. Suggestion: a subdivision Homeowner's Association, for example, might want to hire an MAI appraiser to compare comps in the sub and the larger surrounding area. Homeowner's associations should consider this, and every homeowner should appeal armed with all the data. Perhaps a mass reduction could be the settlement of negotiations between an Association and the municipality. Homeowner's associations should use their clout, alone or with other Associations. After all, the assessment function is a political process. |
