It just makes you weep

For discussion, news, comments, questions and information about Crete & Greece.
Kilkis
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Joined: Sat Apr 21, 2007 3:58 pm
Location: Near Chania

Re: It just makes you weep

Postby Kilkis » Fri Dec 23, 2016 5:34 pm

Greece does base its property tax on the "value" of the property. It happens to use an "objective value" rather than a "market value" because of the difficulty of assessing an accurate "market value" across all properties. The "objective value" takes into account most of the things that would affect the "market value" and they are all things that can be determined objectively, hence the name. They have also used what information they have on "market value", i.e. the indexation tables discussed in another thread, to adjust the "objective value" from time to time.

As an example, how would you set a "market value" for my house? It has never been bought or sold. It was built to my own design and specification so there is no house anywhere in Greece exactly like it let alone in my area. The system used in Greece is no better or worse than the system of rateable value bands that are used to calculate council tax in the UK, which is the UK's nearest equivalent of a property tax.

Warwick

mouche
Posts: 555
Joined: Sat Jan 15, 2011 5:43 pm

Re: It just makes you weep

Postby mouche » Sat Dec 24, 2016 9:08 am

Kilkis wrote:
As an example, how would you set a "market value" for my house?

Warwick


You could ask a realestate agent? Quite normal to do just that if you need documentaion towards a bank when applying for a mortgage or if/when you consider selling to buy another house! How else would you plan to make a move something most people do during the course of ones life, some even many times.

Kilkis
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Joined: Sat Apr 21, 2007 3:58 pm
Location: Near Chania

Re: It just makes you weep

Postby Kilkis » Sat Dec 24, 2016 11:12 am

I could indeed provided I have a good sense of humour. In fact I had to do just that 4 years ago when I had to provide a market valuation to the UK tax authority. I used the estate agent through whom I bought the land and who had also acted as a developer building my house so I reckoned he had the best knowledge. He said that if he was selling it he would put it on the market at €220,000 but being realistic it was probably worth between €150,000 and €180,00. So which value would you use for property tax?

I actually know people who have recently asked estate agents for a valuation of their house and what they were told is ridiculous. In those cases the house had sold in the past so it is possible to make a good estimate of its market value using its previous sale value and the official price index tables. As usual the estate agents estimate is way above that figure.

I also know of several properties that have sold. The realised price was between 50 % and 60 % of what the estate agent said it was worth.

Finally, are you proposing that the Greek tax authority appoint a team of estate agents in each area of the country and pay them to go round and value every property in Greece? I just have this vision of answering the door to find a man with a clipboard saying that he had come to value my property for the government. He estimated its value at €X but of course it is possible that it might be worth a lot less, said with an outstretched hand.

Warwick

mouche
Posts: 555
Joined: Sat Jan 15, 2011 5:43 pm

Re: It just makes you weep

Postby mouche » Sat Dec 24, 2016 11:49 am

Kilkis wrote:Finally, are you proposing that the Greek tax authority appoint a team of estate agents in each area of the country and pay them to go round and value every property in Greece?


Yes, I actually do and this is excactly what has been done in a number of places in my country. No, they did not have to enter the house, never heard anybody actually saw them, and afterwards the list of each and every property was made publically available for anybody to see. Out of thousands and thousand of properties very few ever made a complaint about the assessed value.

So in short; yes, and it works, quite well actually!

And what makes you so sure that you are right that a particular propert is worth 50-60% og what a realestate agnet claims? Well, unless you claim the be the one and only expert also in this field that is!

Kilkis
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Location: Near Chania

Re: It just makes you weep

Postby Kilkis » Sat Dec 24, 2016 2:09 pm

No. I don't claim to be an expert in anything. I simply express my opinion and justify that opinion with information. I know nothing about property prices other than what I find by research. In the cases I quote, I am saying that an estate agent told the seller what he/she thought the property was worth. They put the property on the market at what the agent recommended. The property actually sold, after a very long period, for 50 to 60 % of that asking price. In each case the seller, getting no viewings whatsoever, gradually reduced the asking price until the property attracted a buyer. It's called supply and demand. You might have heard of it. What an agent claims is not the market value of a property. What a buyer is prepared to pay is the market value. Why did the agents get it wrong? Typically the agent asked what they had paid for the property and suggested a price about the same or a bit higher. The highest priority to an estate agent is getting properties onto their books. Selling properties is a numbers game. The one with the most properties to sell will inevitably sell the most, all other factors being equal. Agents know that if they say that your property is worth 50 % less than you paid for it they won't get the contract.

Also the government does collect records of what properties sell for and compiles a price index based on the change in those prices averaged over a large number of properties. How much the price has risen or fallen according to that index depends when you bought and when you sold. In the cases I quoted the index at the time of sale was 40 to 50 % down from when the seller originally bought so the actual market price was in line with what the index would have predicted. So in this case my opinion is based on actual sales of real properties and is validated by official government figures.

If the people doing the assessment in Norway didn't enter any premises to compare them what did they really base their valuation on? Probably the area in which the property was located, the size of the property, what type of property it was, e.g. house apartment etc, if an apartment what floor it was on, how much land was with the property and how old it was. In other words, exactly the same things that the Greek government uses to assess an objective value. All things that can be objectively measured and are a matter of public record. Yes there is some guess work involved, especially in saying what is a property in area A worth compared to a similar property in area B but in reality agents are also only guessing when they make that estimate. The Greek government bases that assessment on the information it has on actual sales in the different areas.

What evidence do you have that the objective values used by the Greek government are wrong? Can you produce any evidence that shows some distortion of objective values relative to market values across different properties? I think it is quite possible that overall they are a bit low but probably not by much. As long as they are systematically low, and I think they are, that can be corrected simply by charging a slightly higher tax rate. A lot cheaper than revaluing every property in Greece.

Warwick

bobscott
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Joined: Wed Aug 05, 2009 5:36 pm
Location: Kokkino Horio

Re: It just makes you weep

Postby bobscott » Sat Dec 24, 2016 6:38 pm

mouche wrote:
Kilkis wrote:
As an example, how would you set a "market value" for my house?

Warwick


You could ask a realestate agent? Quite normal to do just that if you need documentaion towards a bank when applying for a mortgage or if/when you consider selling to buy another house! How else would you plan to make a move something most people do during the course of ones life, some even many times.


Mouche: you write as if real estate agents here have a long-established and experienced work force.

Unlike the 'western world' where we come from, that is just not so. Nineteen years ago, estate agents didn't exist - certainly in this part of Crete and I suspect elsewhere on the island. Not a single estate agent in the area. We wanted to rent long-term and the advice was to advertise on power poles, telephone poles etc, asking for people with rental properties to contact us!

That situation has of course changed and now the place is over-run with recent (in the last 13 years or so) estate agents. Some will have had little or no prior experience and certainly, in a market where property was rarely bought and sold, no local examples with which to work and make judgements. Empirical evidence of value is largely non-existent.

Setting a market value for a house, if it is to mean anything, depends on long-term experience of the market, a keen understanding of the current economic situation in Greece and crucially, knowledge of the aspirations of the clients (buyers and sellers) . Oh, and don't forget the need to know and understand Greek logic. (Man has land for sale - after 3 years of not selling and then receiving an offer, he puts up the price! True. It happened to us).

At the end of the day, notwithstanding what I have written above, a market value is what someone else is prepared to pay.
Yesterday today was tomorrow. Don't dilly dally!

mouche
Posts: 555
Joined: Sat Jan 15, 2011 5:43 pm

Re: It just makes you weep

Postby mouche » Sun Dec 25, 2016 10:31 am

Kilkis wrote:It's called supply and demand. You might have heard of it.


No, never have so really thanks a million for enlightening me! It does, however, sound very complicated. Are you implying that in order to conclude a transaction that you need both a seller and a buyer? How does a seller find a buyer and a buyer a seller? Shout?

Kilkis wrote:If the people doing the assessment in Norway didn't enter any premises to compare them what did they really base their valuation on?


May I assume you have never bought a property taking out a mortgage? Nor ever been in contact with anybody who has? Well, then let me enlighten you. The bank (or any other creditor) would like to have some sort of security for lending out some money. Now, what do they do? They ask for an appraisel on the property in question and you know what? They would normally ask somebody with some knowledge in this field, quite often an appraiser or a real estate agent. The good news is that the bank would normally be quite happy with the documentation the buyer thus is able to produce, but then again, what do banks know about anything!

And by the way; properties are beeing sold in Crete, even in your neck of the woods although I appreciate this may come as a big surprise to you?

Kilkis
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Joined: Sat Apr 21, 2007 3:58 pm
Location: Near Chania

Re: It just makes you weep

Postby Kilkis » Sun Dec 25, 2016 12:32 pm

Whenever I took out a mortgage I had to get an appraisal by a surveyor. The cost was about €500. The bank certainly didn't accept information from an estate agent. Let's assume there are about 2 million properties in Greece. To survey them all accurately would cost the government about €1 billion. If an estate agent wanders round, waves a finger in the air and says, "I think that house is worth €X" I don't see that the system would be any better than the current system?

So far you have produced no evidence whatsoever that the system of objective valuation doesn't work. It is simply your opinion that it doesn't and some sort of market value would be better. What is your evidence? What quantitative difference would there be between the two systems? If you are basing it on the fact that the objective value of your property is not the same as you think it is worth then that is meaningless. Firstly its market value and what you think it is worth may be very different. You only find the true market value when you sell it. Secondly, all that matters is that the relative objective values of different properties are correct. If the market value of your house is 50 % more than mine and the objective value is also 50 % more then the system of objective valuation will work. The offset can be taken into account in the tax rate.

I am fully aware that houses have sold in my neck of the woods. My earlier posts were based on actual sales. My argument was that they didn't sell for what the estate agent said they were worth. An estate agents estimate of what a property is worth is not accurate based on objective evidence of actual completed sales. What objective evidence do you have that it is accurate?

Warwick

PS Merry Christmas.

moved 2 crete
Posts: 734
Joined: Mon Mar 15, 2010 1:37 pm
Location: chania

Re: It just makes you weep

Postby moved 2 crete » Sun Dec 25, 2016 8:34 pm

Objectively the price when we bought plus what we have spent on the property since we bought summed up, then we would expect to breaK even, irrespective of so-called market value, also bearing in mind where we intended to move to and the cost of purchase price of property there, profit is only in the mind of property developers, we purchased 11 years ago at a price we could afford then spent gradually to improve the plot but not being property developers per say, paying 150 thousand euro for our 200 square metre plot originally and spending approx 50 thousand more over time we there fore would try to get 200 thousand if we intended to sell, but again if we could get a property where we intended to move to at considerable lower price it would affect our eventual decision regarding our subsequent selling price irrespective of a profit motive........... :)
Dave H

Kilkis
Posts: 8775
Joined: Sat Apr 21, 2007 3:58 pm
Location: Near Chania

Re: It just makes you weep

Postby Kilkis » Mon Dec 26, 2016 12:31 am

moved 2 crete wrote:... but again if we could get a property where we intended to move to at considerable lower price it would affect our eventual decision regarding our subsequent selling price irrespective of a profit motive........... :)


Agree Dave. It doesn't matter what the absolute price is unless you are selling and not intending to buy again. Prices tend to increase or decrease as a percentage of original price. If you are "up-sizing", any increase in prices tends to increase the difference between what you are selling and buying and so you have to pay even more. If you are "down-sizing", the increased differential means you finish up with more cash. The opposite is true if prices are decreasing. "Up-sizing" and "down-sizing" should be interpreted as more expensive or less expensive not actual physical size, although that may also be the case.

There was a discussion on here some time ago in which I argued that if average prices increased faster than average wages it was a bad thing. Some people argued that it was a good thing, largely on the basis that they had done very nicely out of that happening. For a number of years now average prices have been increasing faster than average wages. Home ownership amongst UK 25-year-olds has dropped from 46 % 20 years ago to 20 % now. A wonderful result for society? And that is despite interest rates being the lowest ever.

Warwick


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