Value on Foreclosed Homes and Short Sales
Florida law requires the Property Appraiser to assess all property at market value as of January 1 each year. To accomplish this, sales and market data from the prior year are used.
In recent years short-sales and foreclosures have become a more prevalent feature of the market, leading to questions as to whether they should be used in assessing property values for tax purposes.
These concerns have prompted the Florida Department of Revenue (DOR), which oversees all County Property Appraisers, to issue a memo about short-sales and foreclosures.
A short-sale occurs when a lender and the owner of a mortgaged property mutually agree that the property may be sold for less than the outstanding debt. In these transactions lenders work with property owners to recover through the sale, a sum as close as possible to the true market value of the property, thus avoiding foreclosure.
In this situation, the transaction may be considered a 'qualified sale' (arms length transaction-good sale) and thus may be used by the Property Appraiser.
In foreclosures, on the other hand, the lender acts without reference to the property owner and there is typically a greater level of duress. Often the property is in poor condition and not reflective of similar properties in the area.
CAUTION: Because a short sale may not be reflective of market value, it is not recommended to use the short sale amount in the Tax Estimator.