I live in the suburbs of Atlanta and I get multiple calls and letters from people, or companies, all the time wanting to buy my house.
Around me they are building houses and selling them for as high as $1.8 million or more. What determines the value of the house, however, is set by the value of nearby, even next door, to the house. I saw a $1.8 million house sitting right next door to a house that might sell for $275K. The question is, what is the real value of the $1.8 million house. It is not $1.8 million.
Most of these expensive houses are what my mother used to call “a palace on a postage stamp.” The lots are small, the house is huge. It looks strange where it sits. One of these monsters sits close to my home. On one side is a house that sold for $225K and on the other side sits a house that was moved from one location to where it sits now, it would sell for about the same. It is those two houses that set the real value of the $1.8 million home, not the builder or the real estate company.
There are subdivisions near me where all of the homes are over $1 million. It would seem like the builder could have chosen a lot closer to those. The house that I have in mind was built three years ago and had three different owners. Either the house has problems or the first and second owners paid too much and could not keep up with the payments. My home sits in a small subdivision of 12 houses, all of the lawns are beautiful, the houses are all well maintained and they were all built about 50 years ago. They all have a personality, whereas the expensive homes close by are sterile in comparison. The million dollar or so houses are all overpriced for their location.
Two houses in my subdivision were sold in the last year or so. The sellers and the realtor probably did not have time to put the For Sale signs in the yard, they sold in a couple of days. The $1.8 million house has been on the market for six months and no contracts have been put on it.
The housing market where I live is hotter than a firecracker but these huge houses are being built, basically, on a two-lane road that has to be expanded to four lanes quickly because of the homes being built on the road. The houses that are selling are in the $300K to $350K price range. Widening of the road will reduce the value of the "Palaces on Postage stamps.”
As for the people calling about buying my property, I cannot afford to sell. The city that I live in has a policy of no property tax once you are 70 years old. The county also charges no property tax because I am a disabled veteran. I also do not pay any ad valorem on my cars. My house is paid for and has been for quite a while. I would have to buy a new one and pay a moving company to take the furniture from here to there. Why do that? I would probably incur more house payments. But I could not get a loan like I had before, 8 percent with $260 payments. You cannot even rent a bathroom for $260 today. The reason that they are trying to buy my home is because I live within a city that has one of the best school systems in Georgia.
Raleigh C. Perry
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I understand your position and your argument(s). One statement is particularly interesting: "What determines the value of the house, however, is set by the value of nearby, even next door, to the house."
While that is theoretically true, it doesn't account for the avarice of local governments and their enforcers. Government assessors of property claim that a home's value for purposes of taxation is based on 'fair market value.' Typically 'fair market value' is defined as the price agreed upon by a willing but unforced seller and a willing but unforced buyer. That may be their published theory, but it's not their daily practice.
I bought my home for fair market value in 2010. It's in an old established neighborhood on a narrow street with no painted centerline and no sidewalks. The seller and I sat down in her living room, we talked for a few minutes, then I asked her exactly how much she needed for the property. She gave me the same number that I had already arrived at myself, and we had a deal; we were both willing, and neither of us was coerced to make the deal. Now it's my living room.
But instead of accepting that fair market value, the county assessor held to his own inflated notions of the property's value, and pointed to superficially similar but much fancier 'comps' in new upscale neighborhoods two and three miles away. I was cheated then, and am cheated again every year at tax time -- and then the assessed value of my home is increased again due to continued building in Black Creek and other high-end developments in totally different neighborhoods around Chattanooga.
It's generally agreed that housing, especially new housing, has been selling at unrealistically high prices. But a sampling of the assessor's online records indicates that current assessed values on those places aren't keeping up with their inflated selling prices. Many high-end homes are being taxed at substantially less than their latest selling prices -- 40 percent less in some cases, 30 percent and 20 percent less in many cases. And it's obvious that the difference must be made up by those of us who don't have enough political clout to demand and receive equitable treatment.
The Hamilton County Board of Equalization, where a property owner can argue with the assessor, is a joke. Their own website states, "When properties are assessed unfairly, others pay the difference." But it's stacked against the home owner; the assessor's staff supports the status quo, and argument is futile.
We're soon going to have a new local representative in the state General Assembly. One great way for that new representative to earn her $60k or so salary-plus-perks is to work up a new law that requires assessors to use the real selling price of a property as its assessed value. Then those who are willing to pay double the realistic value for a place can continue to put their money where their aspirations are, and those of us of more modest means will not be sorely penalized for the greed of others.
And while you're at it, how about an exemption from school taxes for geriatric owners? I've never had a kid in the public schools, but have paid taxes to support those schools for nearly 60 years now.
Larry Cloud