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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (13063)	8/23/2003 5:14:28 PM
From: Tradelite	Read Replies (1) \| Respond to of 306849

<<All things being equal, buyers will pay less for a house if the property taxes are high. >> That's a curiously interesting statement. The psychology I encountered among buyers and sellers was often a little different. Many buyers I used to meet got concerned if a house they were looking at was assessed at a value way below the asking price. They wanted to see the assessment be as high or higher than something else they had looked at or at least in relation to others in the neighborhood, as this somehow affirmed its value in their eyes. Obviously these buyers didn't know about the shortcomings of the tax assessment process when it comes to home valuations, and obviously they weren't thinking that higher assessed value also meant higher property taxes. And then there were the sellers, who often paid little attention to their assessments. When I'd do a listing presentation and give them a copy of their tax records printed right off the MLS, some would get quite upset that the assessed value of their home appeared to be so far below what they wanted to ask for it in a sale. Actually had one fellow demand to know what I was going to do about correcting his tax assessment. I told him I wasn't going to do anything and strongly suggested he not do anything to formally appeal it to the county tax assessor's office, either. If allowed to visit and personally inspect the home, the tax assessor's appraiser just might decide this owner had a mighty fine house and raise the assessment much higher. And then there is always the fallacy of focusing only on property taxes when considering how much it will cost a buyer to move to another jurisdiction. Other taxes must be considered, as well. Income tax rates, for one thing. But there are other taxes. Many buyers in my area have a choice of living in Maryland, DC or Virginia when they transfer to this area for new jobs. Maryland has a real nasty real estate transfer tax that is much higher than Virginia's. Virginia's legislature years ago tried to raise our transfer tax to resemble Maryland's, which resulted in a huge tax-revolt lobby (led by the Virginia State Association of Realtors and citizens that were enlisted to join the lobby) which successfully shot down the whole idea. Even the Marylanders were warning us not to let it happen, because once the tax got raised a little, it would become fair game again and again and effectively raise the cost of buying and selling a home for everyone in the state. In comparison with other states, our state sales tax on retail purchases is only 4.5 percent, but some local jurisdictions impose additional sales taxes on top of the state rate, making them more costly for businesses and consumers to settle in or frequent. In my particular little zip code of a very large county, an additional tax is imposed on top of the regular county property tax for all residents, to fund a local non-profit community center. (I don't use that center and resent the tax.) The list of various taxes goes on in every state and metro area around the country, so it seems that debating the property tax issue in California needs to include consideration for other taxes that Californians must pay. Maybe their property taxes are being held down while others are spiraling out of sight.