I just sold REO SFR to a client as a buyer's agent. Today, buyer received a tax bill with the previous owner's foreclosed amount which was $430K and not based on his purchase price of $240K. Is there something wrong? Please advise.

Tell him to call his county assessors office. Lots of tax bills are skewed right now. The new homeowner will have to contest it.

Can't speak for CA, but in TX you can only challenge tax values one time a year. Any home that we sell at this time will be taxed on last year's values. The buyer would be able to challenge next year's tax value.

Very common unfortunately... inside the tax bill *should* be instructions on how to dispute the value. Have him follow the instructions ASAP as their is a time limit from mailing to when you are allowed to dispute.

In NY the tax bill is based on assessment status date (I think it is March 1st, at least for most areas). A new owner needs to contact the assessor prior to that date if a change in value has been indicated by a recent arms length sale.

Oh my..

is this your first sale?

How long ago did it close?

They will get a supplemental bill which should be correct. You need to read the CAR document "REGARDING YOUR SUPPLEMENTAL TAX BILL". You should have had your clients sign it.

It is also found in the Statewide Buyer and Seller Advisory! This little 10 page document gets you out of a lot separate disclosures. Think of as the Buyer's Inspection Advisory (which prints out automatically with the Puchase Agreement) on steroids!

I'm not sure if it's just down here in SoCal, but I'm seeing (on multiple occasions) that it's not just an issue with the sup. tax bill... new homeowners are getting assessed on the old values, not the new "just paid" values. The real bummer part is that the new homeowner thinks that the tax bill just hasn't caught up to the new value and by the time they press the issue the time period to dispute the value has expired. I also recommend that owners keep the envelope that the bill came in to prove when they received the bill.

Hopefully OP's buyer will get a correct sup., but I'd still put in a dispute or in the least a call to the county records office to see the status.

Lin

I'm located at the northern end of the state. Until recently, my county was using the old assessment from last year to set the assesed value. Recenty, they've changed and are making new ajustments. Their new values are still to high...example: home sold for $350k three years ago...I sold it for $185k two months ago......county assessed at $230k...I sold the same floor plan 4 months ago for $195k......buyer contested their assessment and value came back at $195k.....values are still dropping....where did the $230k value come from? I have to fight the county on every sale. This drastic drop in values is screwing up their annual budget...And, in the same breath, I believe they're over assessing to establish a new base line for Prop 13.....and that base line is too high.

I'm more in tune to values today than I've ever been due to the amount of BPO's I do monthly. I've been in areas in this county that I haven't been in years. At least our county is starting to assess values at close of excrow, but, they're still over assessing....Again, I believe they're setting a false base line for Prop 13.....just my opinion though....

It ALWAYS pays to research the tax bills.In my area there are many exemptions that can be taken so the previous owners bill might not match up to the new owners.

Lin it sounds like you assumed things about the property taxes.At least you will know for next time and hopefully you have an understanding buyer who is a new homeowner.

Thanks everyone. I did tell my buyer to contact county and fill out the request to have the property re-assessed. Yes, the buyer signed the disclosures, etc. I just never have the issues raised before. So on the supp. tax bill, will it shows the buyer has a credit on the tax overpayment then?

I wish you good luck; but don't hold your breath. Across the Country, Assessments will have to be re-adjusted enmasse; but it won't be because some individual HomeOwner comes in an grieves his Taxes; it will happen S L O W L Y . Your Buyer got a good deal on the Purchase Price; but that is not automatically transmitted to a similar savings on Real Estate Taxes. So too, when he went to buy Insurance, they probably insisted that the property carry coverage up closer to the Assessed Value, because it would cost much more to replace it were it destroyed; the Insurance Carrier could care less about the Purchase Price; they're focused on Replacement Cost.

Municipalities across the Country have reassessed to raise values on all properties (not just those that have sold) to be at comparable values; what is known as the CLA or Common Level of Assessment . . . . but then the Market was pulled out from under them. The Tax Rates they have set to support their budgets for all the things they do, are now artificially low because Assessments are at historical (albeit Temporary) highs. Assessments overall should come down across the board and respective Tax Rates adjusted up so that the Taxing Authority still arrives at the same amount of Revenue.

Just don't expect them to go and adjust the Assessments for one little complaining HomeOwner. They'll probably just have to tell him "You got a good Deal". But we still need our Taxes. We still need to put gas in the School Buses and pay Teachers and fill Pot Holes and provide Municipal Services. Your Sale Price doesn't have much to do with that.

The Common Level of Assessment (CLA) is probably too high for Everyone; not just those that sold recently. They will come down as Tax Rates are adjusted UP. Good Luck !

Thank you for sharing your thoughts. I'll come back to post the update on the result of my buyer's pursuit of reassessment.

Update...My buyer called and told me that he just wasn't patient enough. He received the sup. bill that shows the correct assessed value. No wonder I never had this issue before but I'm glad it came up.

In this area the budget was cut and workers were offered early retirement effectively reducing the work force and expenditures to adapt to the new economy due to real estate values not supporting their previous budget.