As January rolls around each year, homeowners begin receiving their property tax bills. That’s why my tax appeal work often picks this time of the year. 
It should be no surprise that assessed home and land values are increasing. Property values have been increasing in many areas for years, with 2020 being a record year for home appreciation in many neighborhoods. So, it should be no surprise that the assessed values of homes are increasing.
In my experience with tax appeal work, usually the county assessor’s values are supportable. So, when might it be worth having an appraisal completed to contest your assessed value?
POOR CONDITION
If a home needs major repairs, clearly this can have a negative impact on market value. The assessor may not be aware of these repairs. Especially if the repairs are on the interior since assessor’s usually do not make interior inspections. Therefore, if a home is in need of some major repairs, it may be worth having an appraisal completed to see if the market value of the home is lower than the assessed value.
In a case like this, I like to take pictures of both the exterior and the interior, to help the assessor see the condition of the home, as well as any significant repairs needed. This is helpful to the assessor as they review my report. It is also helpful to provide the appraiser with bids and cost estimates, from qualified professionals, for any major repairs that are needed. These provide further evidence that the repairs are indeed needed, as well as their associated cost(s) to repair. If a homeowner hires an appraiser for a tax appeal, where repairs are claimed to be needed, I highly recommend that they require the appraiser to perform an interior observation and take pictures.
Several years ago, an investor hired me to complete an appraisal of one of their single-family rental properties. They claimed that there was a lot of work needed to the interior. However, they did not want me to go inside. They claimed that the tenant who lived there was difficult, and it was just too difficult to let me inside. Whether that is true or not, I do not know. I explained why a full interior inspection is better. But they insisted on not having an interior inspection made. The explanation they gave me seemed plausible. They did provide me with interior photos and asked me to develop my opinion of value based upon the condition of the property, as reflected in the photos they provided me.
Of course, I had to make an extraordinary assumption that these repairs, and the condition of the home, as represented in the photos, reflected the true condition of the home, since I was not able to see for myself. I explained that in situations like this, the assessor is going to want evidence that these repairs exist. And, since I was not able to access the property, I strongly encouraged them to obtain bids from contractors for the repairs they claim were needed and submit them to the auditor prior to our meeting with the board.
The day that we met with the board of revisions, my client did not bring any evidence of the repairs that they claimed were needed, other than the photos they provided me with. As you might imagine, the board of revisions did not lower their assessed value. I do believe that if my client had allowed me to take interior photos, or provided estimates by a qualified professional that documented the repairs needed, it would have helped their case. I can completely understand why the board did not adjust my client’s taxes in this case.
By the way, when it comes to taking pictures, I have appraised some homes in which my client, the homeowner, did not want interior photos taken for privacy reasons. That’s not a problem. Photos are most needed when the appeal of the assessed value is based upon condition.
I have helped homeowners lower their assessed value without going inside their home. However, the basis for those claims was not the condition of the property. These appeals were based upon comparable sales in the neighborhood that had sold for less than the assessor’s valued my client’s home at. In these kinds of cases, the argument was usually more cut and dry. That being said, in my opinion, an appraisal with a full interior observation provides the best chance that the board will revise their value, when there is a discrepancy.
Most of the time, the board of revisions will lower their assessed value, if a reasonable case is made for doing so. Sometimes they lower the value to my opinion of value, and at other times, somewhere in between. This leads me to a second reason to have the appraiser perform a full home observation.
INCORRECT GROSS LIVING AREA
Another area that can have a big impact on the accuracy of the assessor’s value is incorrect gross living area information. I recently appraised a home for a purchase, in which the county auditor reported a gross living area was six hundred square feet larger than the home really offered. I went out a second time to remeasure the home, just to make sure my measurements were correct. They were. It’s a shame the sellers have been paying real estate tax for years, on a home that is considerably larger than their home really is. Over the years, that can really add up!
Interestingly, this purchase fell through. My opinion of value was about twenty thousand dollars less than the purchase price. Much of that was due to the home’s being listed with an inaccurate gross living area. Interestingly, it is back on the market. The listing agent was made aware of the inaccuracy in the gross living area. Despite that, the home is now listed again in the MLS with the same inaccurate gross living area. My point?
What if the next buyer qualifies for an appraisal waiver, or the bank only requires a desktop appraisal, which is becoming all too common right now? There is a good chance that the new buyers will have no idea about the relatively large error in the home’s reported gross living area. The new buyer’s might reason that since they just purchased the home, no doubt the bank would ensure that the gross living area is accurate. Right? Not necessarily! The new homeowner may be paying more in taxes than they should, simply because of this error in the reported gross living area never being caught.
By the way, isn’t that a good reason to hire an appraiser for yourself, if you’re going to purchase a home, and you qualify for an appraisal waiver, or if you find out that only a desktop appraisal was completed?
If a homeowner feels that their home is smaller than what is being reported, it might be a good time to have the home appraised, or at least measured. Many appraisers offer measuring services. So, even if an appraisal is not needed, just having a good idea of the gross living area can be helpful.
Speaking of gross living area inaccuracies, a few years ago, I appraised a home in which my opinion of value was considerably higher than the county auditor reported. Why? Because the home’s gross living area was considerably larger than the county reflected. The homeowner was not thrilled, but they understood. I had mentioned this in another article I wrote several years ago on tax appeals. So, if it sounds familiar, that’s why.
By the way, when an appraiser is hired to appraise a home, their findings are never reported to the county assessor/auditor. So, while my appraisal did not help the homeowner with regards to their taxes, it did not hurt them either. At least they now know the accurate gross living area of their home, which may help them price their home accurately if they ever want to sell it. So, there was still value in having the appraisal competed.
APPROACH THE BOARD OF REVISIONS WITH A RESPECTFUL ATTITUDE
One last piece of advice I can offer, is when it comes to pleading your case in front of a board of revisions. I encourage my clients to stay calm and always remain respectful. Thankfully, my clients have always done so. The members of the board of revisions have a difficult job to do. They go over thousands of cases. They want to be fair and impartial. Getting upset, yelling, making accusations and demands will never help. While waiting outside of the conference room, at times, I have heard muffled sounds of what sounds like some pretty heated conversations.
When a homeowner is calm and respectful, it is always helpful. As the saying goes, “you catch more flies with honey”. Answer all their questions honestly and frankly and then let the chips fall where they will. Keep in mind that most boards will not give an answer at the hearing. Typically, it takes a couple of weeks for them to provide an answer, in writing, regarding their decision.
Hopefully, that gives you a little information that may be helpful when it comes to tax appeals.
This week, I will leave you with a song from Loudon Wainwright III. I love listening to this song while it is gently snowing outside. This song can apply to a lot of different situations. By the way, while we in the north are enjoying the snow, there are many in the south who are really having a terrible time with the cold and snow right now. It’s one thing to have a home that is equipped for the cold. For those in the south who do not, this is a terrible situation. I hope that the cold weather get’s out of there quickly, before more people are hurt. Hang in there! Warmer days ahead!
Have a great weekend everyone! Be safe out there, and don’t drive angry!
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If you are interested in stats, and nothing but the stats, for neighborhoods in Northeast Ohio, check out my other podcast. In it, I provide short episodes that provide you with stats on median sales prices, marketing times, housing inventory and other related stats, on specific neighborhoods in Northeast Ohio. You can find me on Apple Podcast, Spotify, Google Play Music, Breaker, Overcast, Pocket Casts, Radio Public or you can listen right here at the Cleveland Appraisal Blog.
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Here are some links to other articles I’ve enjoyed recently! I hope you will also…
The Housing Market’s Slippery Slope – Housing Notes by Jonathan Miller
Composition Effects for Appraisers – Yolo Solano Appraisal Blog
The Children of Foreclosure – The Voice of Appraisal with Phil Crawford
Zillow Gets Pillowed Appraisers Laugh! – APPRAISAL TODAY
What Is A Competitive Market Area? – Birmingham Appraisal Blog
What is your housing persona? – Sacramento Appraisal Blog
Modernization Part VIII: Of Coarse? – George Dell’s Analogue Blog
Texas Weather Emergency – DW Slater Blog
Where to purchase non-counterfeit N95 masks from small U.S. manufacturers – Covid Science for Everyone
Nice job Jamie. I definitely echo your sentiment about the way an owner approaches the board. I find diplomacy is critical and sometimes might help open minds. I think some people feel being militant and heavy-handed is going to get results, but that’s just the wrong vibe here. Show a well-supported value and be cool where possible. Though there are situations where an owner has been sincerely wronged, so obviously I’m not saying to not be offended. 🙂
Thanks Ryan! I agree. I’ve had good success with most of my clients in this regard. There have only been a couple of times when the board didn’t lower their assessed value. One did surprise me as it was so clear they were way above the market. Most of the time they are very reasonable, if like you said, the value is well supported. The boards want to get it right also.