Hey, as long as you're going to pay it back, why not? They don't care whether you got a good deal: just whether they're getting the money + interest back.
I know that here they won't give a mortgage if the house doesn't appraise for the asking price. At least not when I was getting a mortgage. That way if you don't pay the house should at least be worth what they're giving you.
They do care if you pay way more for the house than it's worth. Because if you default, they have to sell it again. The bank does their own evaluations and if the price you want to pay is outrageous for the property, they will turn down your mortgage application.
Can't speak to it from personal experience, but our realtor said she'd seen it happen.
Well, as Jan pointed out, the municipal evaluations don't necessarily calculate "worth". Unless you've got a piece of paper saying that the house sold recently, and for how much, the municipal amount can seem somewhat arbitrary.
However, that big of a difference ... Yeah, that would be a red flag in my book.
Ah, it's a "Sauve special". Which, while we were house hunting, became our code for something that looked like it was about to fall down. Maurice Sauve is a lovely fellow, but just about everything he lists needs a lot of work to make it properly habitable, in our experience.
In Montreal, the municipal evaluations are often 10 years or more out of date. The municipal evaluation is *just* for tax purposes and has absolutely nothing to do with the current market value of the house. The municipal evaluation is based on square footage, number of bedrooms & bathrooms, and neighborhood. It doesn't take into account the state of repair, renovations, etc.
In Ontario, the evaluations are done by a private corporation under contract to the government. The evaluations are done annually and are based on land size, square footage, year of construction, number of bedrooms and bathrooms, and recent "comparable" sale prices. I'm convinced actually they're generated by a computer and the people who programmed the computers were on crack. According to our Ontario evaluation, we paid $20K UNDER the market value for our house. Yes, that means we're being taxed for way more than we actually paid for the house. Like I said, on crack. I wouldn't be at all surprised to hear that a property had been undervalued by 100K.
We looked at a house that was going for less than the evaluation price. Our realtor told us that if we presented the papers to the city of how much we paid, vs. how much the taxes were, our rate would be adjusted accordingly.
Yeah, I didn't have my act together enough to contest the evaluation last year - plus we didn't yet have our final papers from the lawyer to say what we paid (we got them 6 months after closing!) This year I might try.
When I bought a duplex in 1989 in Montreal, the city adjusted the evaluation to the sale price for our "welcome tax" and our first property tax bill. Of course, that was up from the previous evaluation. I thought it was automagically changed to the sales price.
One of the uses for the municipal evaluation is to establish the ratio of value between land and buildings.
There are two evaluations the city one and the one the bank gets when purchasing a home, right now the city evaluations are lagging behind real property values and playing catch up. The city decided with the new valuations to move them up slowly so as to not shock the owners with huge tax increases...so right now city property evaluations are not in line with true property values. Now the bank evaluation is more accurate, I mean it looks at the city property evaluation as well as comparables in the neighborhood as well as the condition of the property being sold. As for the bank they will look at this evaluation and if it doesn't add up to the amount being requested to finance then they will not lend out the funds. In Canada we are more conservative, we always have been (maybe the states are now overly conservative), so the evaluator will always low ball the property value just to make sure the bank is covered.
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branchandroot
no subject
Date: 2009-09-18 07:40 pm (UTC)no subject
Date: 2009-09-18 07:49 pm (UTC)no subject
Date: 2009-09-18 08:13 pm (UTC)no subject
Date: 2009-09-18 08:15 pm (UTC)no subject
Date: 2009-09-18 08:29 pm (UTC)Can't speak to it from personal experience, but our realtor said she'd seen it happen.
no subject
Date: 2009-09-18 08:36 pm (UTC)no subject
Date: 2009-09-18 08:43 pm (UTC)However, that big of a difference ... Yeah, that would be a red flag in my book.
no subject
Date: 2009-09-18 07:41 pm (UTC)Granted 114K above the evaluation seems to be on the extreme end of the curve. I've seen as much as 40-50K above the full municipal evaluation.
Although that could be just the evaluation of the land and not the structure?
no subject
Date: 2009-09-18 07:49 pm (UTC)no subject
Date: 2009-09-18 07:52 pm (UTC)no subject
Date: 2009-09-18 08:01 pm (UTC)But
no subject
Date: 2009-09-18 08:08 pm (UTC)no subject
Date: 2009-09-18 08:09 pm (UTC)no subject
Date: 2009-09-18 08:08 pm (UTC)no subject
Date: 2009-09-18 08:10 pm (UTC)no subject
Date: 2009-09-18 08:10 pm (UTC)no subject
Date: 2009-09-18 08:11 pm (UTC)no subject
Date: 2009-09-18 08:12 pm (UTC)http://www.expertimmobilierpm.net/en/listingdetails?search_fd0=MT8179747
no subject
Date: 2009-09-18 08:15 pm (UTC)I see what you mean about the eval.
no subject
Date: 2009-09-18 08:25 pm (UTC)no subject
Date: 2009-09-18 08:35 pm (UTC)no subject
Date: 2009-09-18 07:57 pm (UTC)In Ontario, the evaluations are done by a private corporation under contract to the government. The evaluations are done annually and are based on land size, square footage, year of construction, number of bedrooms and bathrooms, and recent "comparable" sale prices. I'm convinced actually they're generated by a computer and the people who programmed the computers were on crack. According to our Ontario evaluation, we paid $20K UNDER the market value for our house. Yes, that means we're being taxed for way more than we actually paid for the house. Like I said, on crack. I wouldn't be at all surprised to hear that a property had been undervalued by 100K.
no subject
Date: 2009-09-18 08:02 pm (UTC)no subject
Date: 2009-09-18 08:25 pm (UTC)It might be worth a try.
no subject
Date: 2009-09-18 08:30 pm (UTC)no subject
Date: 2009-09-18 10:35 pm (UTC)One of the uses for the municipal evaluation is to establish the ratio of value between land and buildings.
no subject
Date: 2009-09-19 04:14 pm (UTC)