A real New Jersey estate appraiser called me earlier this evening. He is working on an appraisal of Greenwich Marina in Cumberland County. His questions focused on why the former owner of our Money Island Marina paid $375,000 for it in 2008. His assumption was that this was transaction grossly overvalued. I did not agree. In retrospect, that seems like a fair value based on what all parties knew about the economy at that time. Nobody predicted how far and how fast property values in Cumberland County would fall. When I bought the marina property – 17 lots in all – from bankruptcy court for $12,000 cash in 2012, the seller’s attorney testified to the court that he felt that was certainly full value for this “scrap of land”. I clarified that the land now has negative value due to various government assessments and so the only way I could build value in the marina business was to separate the land ownership from the business ownership. The land was given to a non-profit entity for long term custodianship while the business was owned by different men who are attempting to revive this business under difficult condition. The appraiser did not indicate his feeling about the value of Greenwich Marina but I doubt it will justify much more than $100,000.
Then just by coincidence later this same evening, a neighbor emailed me tonight to say that his 93 acre farm with three buildings was just appraised at $109,000 vs. a tax assessment valuation is 2 1/2 times larger at $275,000. That 2 1/2 overvaluation is familiar to us at Money Island as well. Average property value in my neighborhood appears to be about $30,000 where average tax assessment is about $75,000. That’s down from about $300,000 in 2006. The surprising reality is that our local government is financially struggling even with tax assessment ridiculously larger than actual property values. Tax appeals are routine under such condition. Yet even so, it’s a scary situation non knowing haw much father real estate can fall here.