HELP!!! Tax assessed value versus actual value

[Marie S.]

I'm in the middle of a deal. I can't get on the same page with the sellers. They seem to think the property is worth a lot more than I perceive. The tax assessed value $22,000 less than the listing price. There are not real comps in the area as all of the multi family units are 2bd rm where as this property has 1 bedroom units. I understand that they may want money for the work that they put into the place, but the work they put in didn't increase the value from when they purchased it. (They purchased it $39,000 less than listing)

I can't afford to lose the place as I need somewhere to live, but I don't want to get duped into paying more than I should. How do I approach this deal?
Is the County Tax assessed value irrelevant in this? How do I determine my next move with no real comps?

[J Scott]

If this is an income producing property, comps don't really matter (and tax assessed value certainly doesn't either). You need to do an income and cap rate analysis to determine the value of the property.

Once you do that, you can share it with the sellers, but ultimately you can't force them to sell for less than they want to sell for. Perhaps wait a few months, and when they realize they can't sell it for what they think it's worth, you come back and try negotiating again.

Btw, if you "can't afford to lose the place," you're in a pretty bad negotiating position, so if that's really the case, you will probably end up paying more than you want...

[Bill Gulley]

There are comps probably, you need to make adjustments. The next thing is to look at the income approach, what it rents for will reflect the value. Tax assessments are usually lower than the market, they probably know that. They need to understand they don't just get back all they put in, maintenance is required for the income they have received. You migh pay a Realtor for a broker's price opinion or get an appraisal, if they will agree to sell at the appraised value.

Otherwise, if they are not motivated and you can't get close enough to your price, move on.

You might get them to do something else to get them closer to getting thier price, like financing the deal. Good luck. :)

[Marie S.]

Thanks. I feel a little better about this...

[Marie S.]

OMG I did it!!! Thanks for you help @J Scott and @ Bill Gulley. I just received the counter. I had to search the forum for "Cap rate analysis" and I'm not completely sure I made my argument correctly. Either way, they dropped the price within range. Soooo excited!!