How To Establish Property Values In Less Than One Second
As a full time Canadian real estate investor, we may be recieving calls at any time of the day or night from someone responding to our marketing. The call may come from a city where we are unfamiliar about the property values, but we have to be able to make an offer quickly.
We can't call our Realtor!
I am sure you are thinking “I'll just call up my realtor", they will look up the address as well as the comparables in the neighbourhood (a comparable being a property within the general vicinity that is a similar house to your subject property, that has sold typically within the last six months).
As a note: In certain economic or market conditions, a comparable isn’t considered a comparable unless it has sold within one month or even less from the time you are investigating. In a normal market, however, a true comparable it is usually six months.
When there's no Realtor to call…
So the normal person would call up a realtor, and try to establish the value of the property that way. But if we can’t phone a realtor because someone has phoned us at 11pm on Sunday evening and we need to get an offer out ASAP, we have to establish value, and from that establish what our offer price is going to be.
So what's the answer?
We have to ask them to give us their property tax assessment. A property tax assessment will have the latest taxation value by the municipality as to what the property taxes are. Once you know that, you will be able to create an offer that is based on a percentage of the assessed value, and more than likely a percentage less than that value.
Best offer strategy
Property values in Canada have generally never gone down more than 30% in the whole history of property values. Therefore, if our offer is perhaps 30% under assessed value, we will never lose.
What else can we learn?
The property tax assessment is either done every one, two or three years, depending on which province you are in. The tax assessment not only has what the municipality considers as the property value, but it will have a legal description of the property and, depending on what province you are in, the age of the property address of the property, the property owners names, etc.
These are all requirements to establish a proper purchase and sale agreement to send out. So if somebody is uptight about faxing over their tax assessment, you tell them its because you need all that information that is on there in order to create a proper offer.
So establish the property value in less than a second and make your offers fast and make them count. This way, we never have to see the property, we never have to talk to a realtor and we can make confident offers that make sense.
Here’s to your next deal!
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