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The Power of Real Estate

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Module 4, Lesson 3
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3: Understanding Property Value and Finding Real Estate Opportunities

Wilson Mercy December 29, 2023
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Discussion of Tax Assessments and Property Value
When assessing the value of a house, it is important to consider the financial costs involved. One common misconception among newer investors is that the tax assessment for a property is indicative of its actual value. However, this is not the case. As the author mentioned, “Many newer investors will see the tax assessment for a property and assume that the property’s assessed value is in some way indicative of the property’s value. This is different.”


Tax assessments are determined by local tax authorities and are primarily used for calculating property taxes. These assessments are often based on general market trends and may not accurately reflect the true value of a property. Therefore, it is crucial to not solely rely on tax assessments when determining the value of a subject property

Appraisal Contingency and Financing
In real estate transactions, an appraisal is an essential step to determine the value of the property. An appraisal is conducted by a licensed appraiser who evaluates the property’s condition, location, and comparable sales in the area. The appraised value helps both buyers and lenders ensure that the property is worth the agreed-upon purchase price.


In the given context, it is mentioned that if an appraisal cannot be obtained for the property at a value equal to or higher than the purchase price, the buyer can request the seller to lower the price. If the seller refuses, the buyer has the right to back out of the deal. This is known as the appraisal contingency.


It is important to note that the appraisal contingency is often tied to the financing contingency. Lenders typically do not finance a loan above the appraised value of the property. This means that if the property’s appraised value is lower than the purchase price, the buyer may need to renegotiate the terms of the deal or secure additional financing to cover the difference.

Finding Real Estate Opportunities
In order to find real estate opportunities, it is important to have access to reliable and comprehensive data. In most states, direct access to all the MLS (Multiple Listing Service) data is restricted to licensed real estate agents. However, there are alternative sources of information available to non-licensed individuals.


One such source is websites like Realtor.com, which provide access to some of the most critical information about properties. While these sites may not offer the same level of detail as the MLS, they can still provide valuable insights such as property descriptions, photos, and listing prices.
In addition to online platforms, another method for finding real estate opportunities is through direct marketing. This involves reaching out to property owners directly, either through mail, phone calls, or in-person visits. Direct marketing allows investors to uncover off-market properties
that may not be listed on the MLS or other public platforms.


By utilizing both online resources and direct marketing strategies, investors can increase their chances of finding lucrative real estate opportunities that may not be readily available to the general public.

Key Takeaway
Understanding the limitations of tax assessments and the importance of appraisals in determiningproperty value is crucial for real estate investors.


Actionable Step
To determine the value of a subject property, real estate investors should not solely rely on tax assessments. They should also consider conducting appraisals and utilizing alternative sources of information such as online platforms and direct marketing strategies.