I am surprised by the Auditor refusing to recognize the correct sales price in the records, but I can understand why they would not want to use it as a basis for calculating the taxes. The sales price at a foreclosure sale is most likely going to be less than the property's true value. Naturally, a forced sale is likely to result in a lower price than a sale on the open market with a willing buyer and willing seller. Thus, I can't really fault the Auditor for maintaining the previous valuation for tax purposes. I assume that there is a procedure to contest the value if the homeowner really believes that his home is not worth the Auditor's assessed value. 

As for incorrectly reporting the sales price, that seems irresponsible to me. It would be better policy to just leave it blank on forced sales if they do not want to report it. My concern would be that if appraisers are using these incorrect valuations for comps, it would artificially inflate the values of many homes in the area. Isn't this kinda what got us into this mess (at least part of the problem)?

At best, I can understand if the Assessor were to just ignore foreclosure sales for the purpose of assessing for taxation, for the reasons that Robert gives in his reply.  But to publish false information is just wrong. 

Dave, in your example, the date is shown as a sale in 2008 to Sally Saver with the 2005 sale amount.  Yet, your quote says that the original date and amount are posted.  If they really are posting the 2005 sale amount with the stated year of 2008, there really is no point at all to the assessor's office.  Just eliminate the office dig as far as you will into the citizens' pockets. 

I will take a closer look at what they're pulling in my area.  It is clear that the taxes have not been decreasing to any noticeable extent.

because those prices accurately reflect the price the property sold for.  Those foreclosure sales, bring down the real estate prices in the area, the more properties foreclosed on, the more values in the area drop.  That is the way it has always worked, and if an appraiser doesn't use those comps in his appraisal, he/she will lose their license.  The foreclosure properties, accurately reflect the climate of real estate all oer the country.  Tax values would follow suit.  If the previous buyer spent $500,000 on the home, was foreclosed on for not making payment, and due to property damage, lack of care, being abandoned for so long, and dropping prices, the lender sold the property for $295,000, then that is all the property is worth.  Why tax the new buyer on a higher amount?  Once the property is revamped, and the county reassesses at some point, that is the time for the tax value to increase, but only if the overall market has increased. 

As the old phrase goes, ........   the taxing body doesn't want to "take a hit",

even though the values are falling (here in Michigan).  Could the lady

(Sally) get a court order to correct the records, as she is somewhat

being libeled by mistatement of the selling price, not even considering

that she did NOT buy the property in 2005 as he wants to state in the

records.  How about some truth in government?????

George

In many situations, appraisers use the 'sales comparison approach' to determine the value of the property.  In most of those situations the auction price of a forclosed property is NOT used in an appraisal.  The sale was not an 'arms length transaction' since the property was sold under duress between affiliated parties.  

Property tax offices also DO NOT recognize forclosure sale prices in their appraisals, because once again, they were not arms length transactions.  A person's individual financial situation does not alter the value of the house.

An appraiser can use what ever comps he chooses.  An appriasal is a statement of opinion and is not fact.  If he has justified reasons for using certain comps, he/she is entitled to do so.  He will not loose his license if he omits various sales transactions, as long as his reason is justified.

Forclosures affect the appraised values in other ways though.  Forclosures tend to resell at a lower rate, and those arms length transactions can be used.   The market and neighborhood analysis are strongly affected by forclosures.  Vacancies & longer times on the market are just few examples. 

Many people do not realize that it is not the forclosures driving the market prices down.  It is simply that the market is currently flooded with homes for sale of all types.  My last house, there were 2 forclosures on my street, and 13 homes for sale.  I had my house listed for over a year before I finally moved in spring of  2008. The excess supply of houses for sale, is what is driving prices down.  Combine that with the decreased demand (since fewer can get approved for mortgages) and you get a declining value in your completed sales comparisions used in the appraisal.  Without having to use a forclosure to compare sale price.