Property Assessment

Who Says Assessors Are Always the Bad Guys

A Service to Those Serving Overseas

Senior Property Tax Consultant Richard Sanderson is offering free consultations for American Foreign Service Officers at the U.S. Tri-Mission in Rome, Italy, who own real estate in the U.S.  The Tri-Mission is made up of the U.S. Embassy to Italy, the U.S. Embassy to the Holy See, and the U.S. Mission to the United Nations of Rome.

According to Sanderson many states will begin notifying property owners of 2013 assessed values in the months ahead.  Property owner’s rarely have the time to understand why real estate assessments have changed, but this rings even truer for American Foreign Service Officers who are busy serving overseas and have likely lost touch with local real estate market conditions.

U.S. Foreign Service Officers include diplomatic positions with U.S. government agencies that serve overseas, including the Department of Agriculture, Department of Commerce, Department of Defense, Department of Homeland Security, Department of State, Internal Revenue Service, and others.

Sanderson had been working in Rome since July 2012, when his wife, Christine Sloop, began serving a three year assignment as the Agricultural Counselor for the U.S. Department of Agriculture, Foreign Agricultural Service. 

A senior property tax consultant with Local Government Services International, Sanderson has more than 30 years’ experience in assessment administration.  He can be reached by e-mail at [email protected].

Myth Buster: Assessors Add Value for Construction Features Without Clear Reasoning

The Unprofessional Assessor Myth – Discover the New Reality

There are lots of areas of misinformation in our society.  Every profession takes on an effort to try and inform the public of misconceptions, refute misinformation, and dispel myths.  For years property assessments (personal property and real property) have been the subject of misinformation.  While assessors have not done enough to educate the general public in what they do and how they perform assessments, a large dose of misinformation comes from our fellow real estate industry experts.

Most misinformation is perpetuated by those who believe the misinformation to be true passing it on to impressionable clients, colleagues and the inexperienced.  Chances are if the broker training you to list and sell homes told you to ignore real estate assessments because most assessors didn’t understand how to really value properties you may have believed it and passed this belief on to others.

Unfortunately I see the results of these inaccurate beliefs perpetuated almost everyday when I talk to property owners and see the replies to questions on real estate discussion forums and communities and Q&A sites by real estate agents and brokers.

Here is a recent example.  A homeowner asked the difference between a brick facade and a vinyl facade.  You’ll notice the question doesn’t ask the difference in assessed value or even market value for each type of façade.  One of the real estate professionals who replied to the question included a comment that left readers thinking that tax assessors add value for brick facades for no apparent reason, which is not the case.  Tax assessors that assign a greater value to brick facade have probably done so after considering:

1. The fact that a cost approach to value (current estimated construction cost less depreciation) assigns greater value to a brick facade. As others pointed out, brick costs more per square foot of wall area covered and, more importantly, it is more labor intensive to construct;
2. Brick has a longer economic life (doesn’t wear out as fast) and is relatively maintenance free;
3. Assessors can test the assignment of additional value to brick facades (and other construction characteristics and amenities) by comparing the sale prices of similar properties where the only difference is one sale had a brick façade and the other does not.

Forget what you think you know about how properties are valued for property tax purposes.  Assessors today gather, verify, and analyze real estate market activities in a professional manner.  They continually ask themselves why the typical buyer of each type of property they assess attributes value to selling features (physical features as well as property rights) and then finds ways to accurately monitor and measure the trends of that market.  Most assessors are as well trained as independent real estate appraisers.  Most attend the very same training courses.

Take an open-minded approach and call your local assessor today.   Ask what they do and how they are keeping up to date on current market trends.  You’ll be pleasantly surprised.  Then tell someone else what you found to be the more up to date story about property assessments.  Or better yet, ask the local assessor to speak at your next real estate professional meeting.

Celebrating 3 Years of Blogging About Property Assessments

Our Property Assessment blog is celebrating three years of blogging success today!  During this time more than 110 feature articles have been posted along with several reports and whitepapers of interest to professional property assessors and those who are concerned about actions and policies related to assessments.  Unique blog topics have included:

Assessors as Managers – Feature articles about managing the assessment function that included managing assessment personnel, next generation initiatives, and project management

Media Toolkit – Resources and story angles for journalists about property assessments and effective public relations programs

Myth Busters – Demystifying property assessments and removing some of the misinformation about property assessments

Property Assessment Careers – Ideas, tips and suggestions for people considering a career in property assessment administration and those who wish to advance their careers

We’ve thoroughly enjoyed the last three years and hope that you have found the content we posted useful.  Whether you work in assessment administration, real estate sales and service, tax advocacy, or tax policy, we look forward to many more years of blogging about assessments.  Let us know if there are issues that you would like us to write about and please considering being a guest author.

Ask the Assessor Q&A Webpage Launched

Are property assessors approachable?

Have you tried one of the many question and answer websites available today?  I've monitored several of these Q&A sites (also advice and discussion sites) that focus on real estate quite actively since January.  I've visited other general Q&A sites for more than a year (Business.com Answers, e-How, and WikiAnswers).  While these sites are quite popular and getting more so every day, I'm still surprised that many people don't go to the best source to get their questions answered.  For example, if you have a question about a personal medical condition you might go to a website that specializes in medicine or illnesses.  You wouldn't go to a Q&A website for veterinarians.  But time after time I see property owners asking real estate associates and brokers (and wannabes) why their assessments changed or tax bill increased.

Although many real estate professionals have had a lot of experience with real estate assessments and taxes, it's way too easy to get into gray areas and perhaps mislead clients.  For example I continually get phone calls from property owners after the assessment appeal deadline who say "when I asked about the high real estate taxes at settlement I was told that if I contacted you I could appeal the assessment."  Sorry, most states have deadlines for filing assessment appeals.  If the real estate assessment is initially determined by the local assessor and you need to contact the assessment office to challenge the assessment wouldn't it make sense to go directly to the source?  Notices of assessment that are sent as part of each reassessment include contact information for the local assessor’s office.

But I know I'm over simplifying this situation.  Perhaps professional property assessors (and I like to include myself in this category) aren't doing enough to let the public know that they can and should approach us with their questions?  What if it's just a matter of effective community relations and outreach?  Because property owners have developed a relationship with their real estate professional maybe they feel more comfortable approaching them with their concerns.

It's been said that if you are really listening to others you are ready to change your thinking based on what they are saying.  I plan to interview and survey several assessors during the remainder of the year to investigate this issue further.  In the meantime Property Assessment has added an Ask the Assessor webpage to their site so that property owners (and others) can pose their questions.

As always, your comments and suggestions are appreciated.

Myth Buster - No Properties Are Comparable to Mine for My Assessment Appeal

Helpful Advice in Selecting Comparable Assessments and Sales to Challenge Your Assessment

Myth:  I'm not appealing my property assessment because they require that I demonstrate how my home's assessment compares with comparable properties and no other homes are like mine.

Myth Buster:

Even if you have a one-of-a-kind home, there are others in the vicinity that are similar to yours for comparison purposes.  Here are some key points to keep in mind when selecting comparable properties:

1. Comparables for tax appeal purposes can generally be: (1) comparable assessments; and/or (2) comparable sales.  Most state tax laws allow property owners to appeal their assessments based on assessment uniformity using comparable assessments and/or based on the assessment being higher than market value (or some percentage of market value) using comparable sales.

2. Look for the nearest homes geographically for use as comparables.  The idea is to find similar homes that would compete with your home if it were offered for sale.  The comparables don't have to be on your street or even in your neighborhood, but don't venture outside of your immediate vicinity just to find lower priced sales.  The assessor and the appeal review board have access to comparable data and will quickly discover your method.

3. Your property doesn't have to be exactly similar to the comparable properties.  One of the truisms of real estate is that no two properties are exactly alike, if for no other reason they both can't occupy the same land area.  I once sat in on a Michigan Tax Tribunal case where the judge asked the property owner if the comparable sale used by the assessor was similar to his home.  The property owner said "No your honor, my house has a porch and the comparable doesn't."  The judge told him that assessors and appraisers typically make adjustments to the comparables to bring them to truer comparison with the property being valued.  Find the comparable properties that are the most similar and adjustments can be made from there.

4. Make sure that any comparable sales that you use in your appeal fit the timeframe used by the assessor in establishing assessments.  Most assessors study a 12 month or 18 month time period before the effective date for the reassessment.  For example, for the 2010 assessments the assessor may have studied home sales during the period from January 1 through December 31, 2009.  A call to the assessor's office can verify this timeframe.  You don't want to spend valuable time collecting comparable sales data that will be disqualified in the appeal process. 

5. Don't see how many comparables you can include in your appeal.  Three to five (at the most) comparables should be sufficient evidence.  Including dozens of sales will not help your case. Overloading the appeal review board with materials may do more harm than good. 

6. Keep in mind that sometimes appraisers and assessors have to establish a lower and higher limit of value for a property and determine an estimate for the subject property within this range of value.  For the truly unique property you can establish that it is worth at least a certain amount but not more than other amount by comparison with properties that are slightly less or more desirable in the real estate market.

7. Ask your local assessor for assistance.  Too many times property owners assume that the local assessor is strictly an advocate for his or her assessment.  While the local assessor has done the best job possible considering the constraints of the job, most will have comparable sales lists available and offer suggestions about the use of comparable assessments and sales.  I've had many property owners talk over their strategies with me and I've given them honest feedback.  Most assessors have the ability to place themselves in your shoes.

For more advice, tips, and suggestions on property tax assessments sign up for Property Assessments E-Alerts.  We'll send you occasional e-mails about issues important to you and subscriber-only publications.

Richard L. Sanderson