Exonumia

The Home Price Valuation Mess And The Dollar

.... in one easy step.

I've mentioned it before in passing (and so have a couple of other people on the forum, Boz being one), but this deserves its own Ticker, along with the rest of the day's news.

Its really quite simple.

Mandate that property tax appraisals are a "PUT" option written by the taxing authority.

That is, you can "PUT" your house on the county for the amount of the assessed value, and they are obligated to buy it for same, at any given point in time.

This brings the two competing forces behind assessments into immediate balance and arrives instantaneously at true market value.

The County, of course, wants to generate tax revenue. They therefore want to assess your house for as much as they possibly can.

However, they also don't want to own your house, and they certainly don't want to sell it back off at a loss. Therefore, they will not assess the property for more than it is worth in the free market, and in fact will assess it for very slightly under true market value to avoid this potential.
Bingo - end of problem.

This value is then the "fair market value" for all transactions. If you wish to pay more as a buyer you are free to do so, of course, but that doesn't change the assessed value - unless the country agrees with you and comes back in to reassess - at which point they run the risk of you PUTting the house on them.

In addition we now have a centralized (by county) database of all the homes and their market prices. This means that banks who have REOs can no longer maintain a fictitious "mark to market", as they can PUT the home on the county for that price as well. Since there is now a market at all times for these properties, they cannot escape true valuation.

If this was to be done we would have instant clarity on true value in the housing market and that clarity would change with actual market conditions.

Simple, elegant,...

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