[mike777]

kenberg, on 2011-January-09, 21:54, said:

This is for Tim, Rain posted while I was writing. I'll get to Rain tomorrow.

Tim, I got you off track a little here I think by originally saying "assessed" when I meant "appraised". The concern is not (at least not immediately) the taxes. The desire is to have a reasonable estimate of what the selling price would be, and to get this without putting the house up for sale to the public.


As anyone working their way through this thread can probably guess, the outline is that two people, A and B, now own a house together and will subsequently each own a separate house. There are more than the usual reasons, which I will not elaborate on, for one of them to keep the current house. Some money will change hands.

There is a possible market solution that goes like this: A offers to buy B out for x dollars, with the added feature that B can say "No, but I will buy you out for that price". Sort of like the old way to cut a cake fairly: One person cuts, the other person chooses. However, it turns out that A prefers to stay in the house, B prefers a different house. Both agree that this is the preferred solution. One can use more sophisticated fair distribution theory approaches to handle this wrinkle, but that is not necessarily best.

Hopefully it goes like this: Somehow they agree on the value of the house, they subtract the remaining mortgage, that difference is the equity, they divide that by 2, and that is the amount that A gives to B. So far, everyone agrees. But now the value of the house must be agreed to.

I believe that we are now pretty much in agreement that the house value will be taken to be the value of the appraisal that the bank does as preparation for a new mortgage. The bank has three appraisers that they use, and for each appraisal one appraiser is picked randomly. When I first posted, I was worried that this whole arrangement was coming undone due to the earlier higher appraisals so I was testing the claim that the bank's new appraisal is a reasonable basis by getting views from you all. I didn't want to propose this approach if people familiar with appraisals were then to say "No, that's crazy, everyone knows appraisals are way off". It does not have to be a perfect method, it has to be good enough so that all parties agree that they are willing to go forward on that basis. I think we are coming to that.

You all have helped. Thank you. As mentioned there are some complexities but I plan to take Phil up on his offer to consult with me as soon as I am prepared to describe my understanding of these complexities.

Btw: A and B are not me and Becky, we are fine.

ok my goal is too make as much money as possible or even more.....

My goal is not to be fair or bla bla bla.

I hire the guy who gives me the highest quote. I hire the best Lawyer is really step one.

None of this is about fairness.

Fairness just will just confuse the Math and you know the Math.

[TimG]

Phil, on 2011-January-09, 21:25, said:

Do property taxpayers in Maine have the right to appeal values? And why does it matter if the whole town is over-assessed?

Yes, property owners may appeal assessed values. How that happens likely varies from municipality to municipality. Where I live it is relative value that is important rather than absolute value.

It can be advantageous for a town to assess property above (or below) market value because that keeps the tax rate lower (or higher). Some municipalities have rules about how much the mil rate can change from year to year and a re-evaluation based on accurate market values could necessitate a change that would exceed the rules. There may also be some state laws regarding mil rates and these may affect education funding (which is shared between the state and local entities). I do not mean to suggest I am well informed in this area.

[TimG]

kenberg, on 2011-January-09, 21:54, said:

Tim, I got you off track a little here I think by originally saying "assessed" when I meant "appraised". The concern is not (at least not immediately) the taxes. The desire is to have a reasonable estimate of what the selling price would be, and to get this without putting the house up for sale to the public.

You should be able to do this with an appraisal. Best would be both parties agreeing to an appraiser and telling the appraiser that the valuation is being done to determine fair market value for the purposes of division of assets between two parties.

[kenberg]

Tim,
Right. We will work on the basis of an appraised value and, as of now, I think everyone will agree that the bank that will issue a new mortgage (different from the previous bank because of rate shopping) will hire a reasonable appraiser. There is some advantage to us all agreeing to this before the numbers actually come in, although a deal is never certain until the ink is dry and the money moves. The fact that the bank chooses randomly from three appraisers, rather than cherry-picking for the result that they or their client wants, is also appealing.

Rain,
Congratulations on the new place. I share your skepticism of appraisals and I would extend it to skepticism of house inspectors as well. Actually, skepticism in general, even of math professors, is a valuable trait. But I think that an appraisal is apt to give us a workable number that is not completely divorced from reality, and that will be good enough for our purposes.


Mike,
I know all about the virtue of selfishness and such things but there are times when cooperation among reasonable people will produce better results. I believe that this is one of them.