Florida law requires that the just value of all property be determined each year. The Supreme Court of Florida has declared "just value" to be legally synonymous to "full cash value" and "fair market value." The Lee County Property Appraiser's office is required to assess property value on an annual basis. There is some perception, particularly from buyers, that the current assessed value is representative of how much they should pay for a property. In many cases it is not!
In Lee County, a computer assisted mass appraisal system is used that incorporates elements of all three approaches to value. In an earlier article I wrote about appraisal approaches which include comparative sales, cost and income approaches. Each approach is considered in determining market value. Foreclosures and short sales may also impact the value of your home. A foreclosure action itself does not specifically affect value. Rather, the transactions that occur before, during and after foreclosures may affect the value. This includes short sales. The law requires the property appraiser's office to review every property transfer and either qualify it for use in setting values or disqualify it from being used to set values. Being aware of the market conditions combined with the sales qualification process ena-bles the property appraiser to properly reflect those factors in mass valuation.
The "Recapture Rule" (FAC12D-8.0062) requires Property Ap-praisers to raise the As-sessed Value (SOH Capped Value) of qualifying homestead property by the maximum of 3 percent or the annual Con-sumer Price Index change, whichever is less, on all properties assessed at less than market value in any given year. So, when buyers are using assessed value as a measuring device to help them determine a purchase price, the current assessment may be much lower than market value. I occasionally come across property that is assessed at $45 per square foot. Based on the quality of construction and visual inspection, I know that house cannot be constructed at a cost of $45 per foot.
It is the ideal situation to own a property that is assessed much lower than market value, in that the property taxes will reflect that current, assessed value. But to believe you can purchase property at a price that is not remotely reflective of market value is unconscionable. Are there properties you can purchase at these prices? Of course there are. But, this has to do with the motivation of the sellers. They may be in a position where they need cash immediately. Conversely, there are properties that buyers pay too much for. The property appraiser's office will look at these transactions, and make the appropriate adjustments to the value of these transfers.
For more information regarding just value, go to leepa.org. Some information in this article was obtained from the property appraiser's website.
Mario D'Artagnan is a broker associate with Realty World Florida Inc. He is a former investigator for the Florida Real Estate Commission. He is also a former real estate instructor. He is a published author and has been a keynote speaker on the subject of agency law. He is also a veteran of the U.S. Air Force. For questions or comments, contact him at firstname.lastname@example.org call 239-565-4445.