Thread: Using taxes as a negotiation point?

Well in most places there is a proceedure to have taxes reassesed if values fall. Therefore it would be likely that the tax bill could be appealed either under the current owner or new owner.

Is the higher tax bill directly related to the price at the time the property was purchased or do the higher tax bill homes have some additional fees?

Originally Posted by CGjerdetu

Well in most places there is a proceedure to have taxes reassesed if values fall. Therefore it would be likely that the tax bill could be appealed either under the current owner or new owner.

Is the higher tax bill directly related to the price at the time the property was purchased or do the higher tax bill homes have some additional fees?

In NY the real property tax system allows a homeowner to file a grievance if they feel their assessment is to high. In a normal market such grievances don't hold much water, because even if the property was assessed a little too high, it does withstand the chance it will go up.

However under recent market changes the market prices are declining it is up to each municipal tax assessor to decide whether the assessment is fair. There is no appeal after the grievance is filed. If the assessor feels your tax assessment is in line, then what can you do? Sue? So therefore it's up to the buyer to decide if they want to chance whether their house will be reassessed. (keep in mind in NY... up to 8% of a families gross income goes to property tax).

So my thought is this... screw it! Why should I stick my neck in the noose on a new home. The seller has it listed for $400K and it's taxes are overassessed at $4000 more than other houses in the surrounding neighborhood for the same listing price. I have to make up for the extra $300-400 in overpayment on my monthly. So I'll go after the listing price with the reasoning the listing is overpriced due to a high tax assessment. For every extra $1000 of extra property taxes vs comparables I will offer $20K less in my offer. So a $400K house with $10K in taxes compared to other $400K comparable that are assessed at $6K, I'll make my ceiling $320K.... the seller can take it or leave it.

If some are scoffing at this reasoning keep in mind that one such listing has dropped that far. A beautiful colonial in my area. Built in 2001, 2400sq. It's been on the market since 6-07. Original list price is $410K... It's just been adjusted a 4th time to $325. $75K drop and it's still languishing. It's in beautiful condition. I've been told through my realtor that the house receives many visits but few reasonable offers. Comparable are listing for $425K and selling for $360K. Why won't this house move?

It's the $11,500K tax bill attached to it.

If I were a buyer in that market, sure why not try to use the tax bill and anything else to get the price down. I don't even know the basics of NY property tax law, but if I were a buyer, and there was no guarantee the property would be reassessed to the sales price of the property, then I may be more likely to buy the home with the lower taxes. There is also the hassle factor involved in going through the tax appeal. If I were an agent representing the seller it may be worthwhile to get the seller to go through the appeal before the house goes on the market. I realize that this may not be possible as reassessments are likely to be a lengthy process.

Assessed value, market value and list price are 3 different things. Yes, you could negotiate a lower price based on taxes, but that won't change the assessed value that taxes are based on. So the following year you would have to contend with the same issue on the taxes.

It is a long process, and probably not a lot of gain by appealing the taxes. Move on.