Use My Eight Step Approach to Estimating a Propertys Current Market Value

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I recommend that you use my eight-step approach to estimate a potential option property's current market value:

Step 1: Log on to your county's property appraiser or assessor's web site to obtain the tax-assessed value of the property under consideration for purchase.

Step 2: Search your county's property tax rolls for recent sales of three to five properties that are comparable in size, amenities, and features and located within one mile of the property under consideration for purchase. Step 3: Carefully analyze any comparable properties that you find, and make sale price adjustments for differences in amenities, special features, and the property's physical condition.

Step 4: Verify the income and expenses, which are listed on the income and expense statement of the property under consideration.

Step 5: Analyze the property's income and expenses for the past 12 months to estimate its net operating income potential.

Step 6: Calculate the property's capitalization rate by dividing its potential operating income by the estimated value, which you derived from analyzing recent sales of comparable properties in Step 3.

Step 7: Estimate the property's value by multiplying its net operating income by the capitalization rate that you came up with for the property.

May 24, 2005

Ms. Karen Burns Manager

Bank of South Florida 6970 Fowler Avenue Tampa, FL 33647

Reference mortgage loan number: SFL082819501 Mortgagor: Robert J. Johnson

Dear Ms. Burns:

Please send a facsimile of the following information regarding my mortgage loan to Mr. David D. Jones at (555) 123-4567 or via e-mail to [email protected].

Principal and interest payment $_ Original loan amount $_

Insurance payment $_ Date of original loan _

Tax payment $_ Payment due date _

Interest rate _ Escrow impound balance $_

Total monthly payment $_ Principal balance $_

Current status of the loan $_

Thank you for your prompt attention to this matter.

Sincerely, Robert J. Johnson

Copyright Thomas J. Lucier 2005. To customize this document, download it to your hard drive from Thomas J. Lucier's web site at www.thomaslucier.com/optionforms.html. The document can then be opened, edited, and printed using Microsoft Word or another popular word processing application.

FORM 12.5 Sample Current Market Value Worksheet

4. Type of construction: $_

8. First mortgage or deed of trust loan balance: $_

9. Second mortgage or deed of trust loan balance: $_

10. Amount of all liens and judgments recorded against the property: $_

11. Amount of annual property taxes: $_

12. Amount of all outstanding city, county, and state fines: $_

13. Total amount owed against the property: $_

14. Property's estimated fix-up costs: $_

15. Property's estimated current market value: $_

16. Property's estimated replacement cost: $_

17. Owner's estimated equity: $_

Copyright Thomas J. Lucier 2005. To customize this document, download it to your hard drive from Thomas J. Lucier's web site at www.thomaslucier.com/optionforms.html. The document can then be opened, edited, and printed using Microsoft Word or another popular word processing application.

Step 8: Calculate the cost of replacing the improvements on the property by using the same building materials and method of construction.

Use the current market value worksheet above as a guide when calculating a property's market value.

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