It could be a simple typo in transcribing records. Anyone know who exactly is filling out the records who could make such a mistake? The government office. Who else? Mortgage company? Real estate agent? Escrow company?
In my jurisdiction (which isn’t Virginia, though), that kind of footnote means the paperwork filed with the county indicated what they term “special factors”: related parties or otherwise non-arms-length transaction, sale in lieu of foreclosure, sale by court order (divorce, conservatorship, probate), sale involving an exchange of properties, a leaseback arrangement, some kind of side contract for personal property, only a partial interest sold, etc. Can you call the county office and ask why they used that footnote?
Its haunted
Doing a little more investigation. It looks like they paid slightly over $400K for the townhouse. Now I am wondering if there was some kind of deal for the new place that included the sale of the old one. From what I can tell, the new place was assessed at slightly over $700K in 2014, and the house was described as built in 1957, They paid $800K. The 2015 assessment is for $1.5 million with no change in the land cost, but a jump in the house cost from $308K to $1.1million with the house now listed as built in 2014.
It still seems odd, though. I still would think that they could easily sell their house for 10-120% under market without problems. It just seems that they sold really lot even if they wanted to unload the place quickly.
If it’s haunted, I haven’t seen it. I hope there is not a termite or other insect problem. I am seriously thinking that they needed to get away from the crazy neighbor and her cats.
A major defect could have been discovered after the assessment.
They may have had a contingency that they had to sell the old house to get the mortgage on the new house. They had a deal lined up to sell the old house, that fell through due to flaky buyers shortly before closing was scheduled. So they had to line up a new buyer very quickly, or risk losing the new house.
OK-now researching the buyer. Unfortunately, the records of the county where he lives require a password but I found a nice google view of his home in Pennsylvania which is apparently not up for sale. It’s a little scary what you can find out on the internet.
You keep mentioning assessed value. In many places, the assessed value has little to do with the actual market price (see California). The assessed value is the one used for property taxes. The appraised value reflects the actual market value. What’s the situation where these occurred?
J.
Okay, so it seems that even though the sold for under the going price they still made a lot of money on the old house. Maybe it was worth it to them to get it off their hands, though it is not unknown to sell an empty house.
Do you have any management for the properties? They’d tell you if there were issues discovered, I hope. So I think the only thing for you to worry about is that this drives down the comps, but that won’t be an issue unless you want to sell soon.
I’d suspect if they are making a lot of money the profit is funny money in a sense,
Is the new house value the house they built?
I know that assessed value is different from market value. The only reason I use it is to compare comparable properties within the complex. As I said, when you look at the actual sales from the past year, they are all $30-70K above assessed value which means that for a given townhouse, it’s market value should be slightly more than the assessed value.
I am assuming it is because the county record list a build date of 2014 and a house that is worth a lot more than the old one.
I think I may have to sit it out and see what the new guy sells for. If he sells for market price then the value of my house will be comparable.
Those ratios (assessed : market) may be dependent on two factors: market trends and government assessment formulas.
In my state, the govt assessment formula says that whenever a municipal-wide assessment is done, the assessed value of each property is determined as the best guess of what a sale would bring. It’s the guess of an expert, but it’s still a guess.
Market trends can cause property values to rise in one area of a single municipality while falling in another. While the municipality as a whole hasn’t changed, individual properties may.
In my state, each assessment in one municipality is multiplied by a factor every year to give the Fair Market Value (FMV). The FMV will change from year to year, but the assessment value does not. It only changes if the entire municipality is revalued, the property changes hands or major construction is done.
When the ratio of (all FMVs) : (all assessments) gets too far out of whack (100% is ideal) for too long (I forget the exact formula), the muni must do a complete reval within Y years, or the state will do it for them, at their expense.
I do know that some states record the assessed value as a percentage of what a property sells for, or is estimated to sell for. That may be called “adjusted value,” and while a $100K house might have an adjusted value of $50K, all properties are similarly adjusted at 50%, so no one loses out. What typically happens is the tax rate (dollars per thousand of value) is merely double what it might be without the adjustment, but it does mean you can’t use the tax figures as a fair sale value without knowing the adjustment multiplier.
And even if you could, that would just reduce your tax hit; you’re still “out” the reduced price. It could reduce their gains, though most people don’t have enough gains on a house to make that an issue: if you’ve been there long enough, a couple would have to profit 500K to trigger a tax hit.
So the place is worth 1M, you paid 400K, you sell at 1M, your profit is 600K, you get taxed on 100K, (600 minus 500). Assuming 30% tax, you pay 30K in tax, so you’ve got 570K in your pocket.
If you sell for 900K, your profit is 500K, and no tax - so you’ve got 500K in your pocket. Yeah, you’re paying less in taxes but you’re giving up that 70K cash.
To the OP: could you email the former owners (if you have their contact) and get nosy? Probably not, sigh.
Look at it this way though. Unless you’re going to be moving or refinancing in the next few years, a slightly lower property value will be beneficial to you: lower property taxes.
I live in Northern Virginia, and the assessed value is almost always quite a bit lower than the sales price. My house is assessed about $70,000.00 less than what I paid for it. In DC, where I used to live, the assessments run even lower. I’m really curious as to which county this is, although based on some of the prices, I have my guesses.
You never know. Maybe there was some other deal in effect, like the buyer showing up at closing with a lot of cash that didn’t get figured into the deal for…reasons.
Maybe they just wanted to unload the property. This happens.
In a hot market, though, I just don’t know.
And where can I find this hot market?
Spite? Did one of them buy the property with a former spouse? It is not unusual for the more financially successful person to squeeze the Ex any way they can, including selling off property at a loss to avoid splitting profits with them. If former owner and newspouse are earning $1M per year between them, and screwing Ex is on the agenda, it makes sense. If they are in a custody battle, or still fighting over assets, then keeping the Ex too strapped to pay legal fees is a vicious but common tactic.
Appraiser here.
I wouldn’t worry about this sale screwing up your house’s appraised value. Any appraiser worth his/her salt will find it blindingly obvious that the sale was not at fair market value (as the assessor has already noted) and most likely will ignore it (or at least mention it and explain why it’s an unsuitable comp.) One sale does not set the market, even if it’s right next door.
Dibs. 
Northern Virginia. Also New York, San Fransisco, and quite a few other cities.
Not Detroit. 
I don’t agree. I can give you dozens of examples where one sale depressed the market severely and widely, or cases where bidding wars did the opposite, boosted everything nearby. The sale next door, due to the proximity, may carry more weight than a comparable (beds, baths, etc.) across town.
I’ve seen appraisals where the comps were so distant, in such different neighborhoods, that the appraisal was worthless. But the bank took it anyway because it looked fine on paper.
Realtor here. I appraise properties all the time. The difference between your appraisals and mine are:
[ul][li]I don’t have to justify my numbers with hard facts. Sometimes the property just feels good or bad, and that is reflected in my appraisal.[/li]
[li]If your appraisal turns out to be wrong, tough for the owner. You’re paid either way. If mine is wrong, I lose a commission if it doesn’t sell, or part of a commission if if sells too low. I don’t care what the hard figures say if I can’t sell it for what it’s “worth,” or for more than it’s “worth.”[/ul][/li]
I’m sure you know of a change in the federal laws a few years ago that made it illegal for a lending institution to specify an appraiser; they must pick at random from a list. This means many of the appraisers I run across have little or no knowledge of the neighborhood.
A Realtor might be highly acquainted with the details of a neighborhood, as I am, for some. This is why I often get calls from appraisers asking if a certain transaction was arms-length or not. I usually can give them very good reasons why it is or isn’t, as I often know the buyer(s) and/or seller(s).
Waqshington, D.C. Houses in my old neighborhood were selling $200,000 over what they were selling for in 2005-2006. The average sales time on market was about a week and generally had multiple offers.
North Arlington on the Northern Virginia side is in the same position with multiple offers on some houses.