Assessor vs sell price

[Abou C.]

Driving for dollars found some great fourplex but off market and I would like to contact owner or send yellow letters.  New to this, but is the assessor price quote relative to potential selling price besides what ever can be negotiated?. 

Example: fourplex

Assessor site: 207K

I am assuming if sold it will be around price or under depending how distressed?.

[Anthony Thompson]

Originally posted by @Abou C.:

Driving for dollars found some great fourplex but off market and I would like to contact owner or send yellow letters.  New to this, but is the assessor price quote relative to potential selling price besides what ever can be negotiated?. 

I am assuming if sold it will be around price or under depending how distressed?.

Assessed value is only very loosely correlated with market value. Lately I have been finding it a little under market values, but in the past it's been higher. I only mention it in a negotiation if it helps me (i.e., if assessed value is below market value and I hope the seller puts more stock in assessed value as a measure of market value than I do).

The best way to determine market value is to look at similar properties ("comparable" properties aka "comps") that have sold recently in the same area, ideally within the last 3 months and ideally 3 comps. Be very cautious with only 2 comps, and never assume you can get an accurate value from only 1 comp.

You can try to get an approximation of market value by looking at sites like Trulia and Zillow but the problem is those sites often don't show truly comparable properties - they are often not too similar to the one you are trying to value, are very old, and/or aren't really in the same area (even though they might be within X miles, neighborhood boundaries really do matter - 1 mile in one direction doesn't necessarily equal 1 mile in the opposite direction!).

Similarly you can try to approximate market value by using riliving.com to look at "asking" prices for similar properties. The good thing with that is that you can do a better narrowing-down as far as similar property and similar area. But the big issue is that you'll only see asking prices, not sold prices.

Anyone can ask too much for a property, in fact it's quite common for people to "shoot for the moon" when they first list a property and hope some sucker "investor" will come along and over-pay for their property.

So asking prices aren't actually too helpful, other than if you're planning to rehab a property and put it back on the market and just get a sense of what the competition is like. 

But don't use asking prices for gauging market value. The only way to determine market value (and even that is a range - which is why appraisers call it an "opinion of [market] value") is to find similar properties in the same area that have sold recently, and where buyers and sellers were transacting freely (what they call an "arms length transaction"), and where the buyers was actually willing to plunk down their hard-earned cash to buy the properties at a certain price.