Every two years at this time of year, I offer to my clients assistance in gathering comparable sales data if they expect to file a property valuation appeal related to their property taxes. I wanted to discuss the valuation process with the assessor’s office so I could give my clients the best information possible. As a result, I had a very interesting conversation with a staff member at the Boulder County Assessors office last week.
Assumptions
Going in, I had a couple of assumptions, some correct and others not. First, I assumed the assessors office would be using a model for valuing property which really only took into account the basic data you find for a property on the assessor’s web site. Things like address, subdivision, beds, baths, square footage etc. This turned out to not be the case. Next, In Boulder County, the valuation notice typically shows 3 comparable sales properties which I assumed were the specific properties they used to arrive at the subject property valuation. Well, it turns out I was wrong on that one too (see below). My other assumption based on past personal experience was that if you appealed citing appropriate comparable properties that showed a lower valuation, you had a pretty good chance of getting a favorable outcome. I think this assumption still holds true.
Read the fine print. The staff member first informed me that they use a “mass appraisal statistical model” which considers many properties similar to the subject property. The 3 properties they list are only “examples” of comparable sales. If you read the notice carefully you will see where it says that. So don’t base your opinion of their valuation on those 3 properties.
They know more than I thought about property condition.
What surprised me the most is that the staff uses lots of other information in determining valuations and conditions of comparable properties. I was told that when a property sells, and goes into the data base for their model, they will use the tools that we Realtors use in listing, selling and buying properties. They go through the MLS listings and look at property photos, interior and exterior, and code their database with indicators of property condition. They also read the descriptions written by listing brokers. This allows them to encode the database with effective age of the property (significant additions and remodels) and to learn about additions and improvements that might have been made without a building permit.
Do they re-value properties after a sale?
Generally not in the middle of the 2 year valuation/assessment cycle. But if the property has changed significantly due to a major addition, re-model or a complete re-build or new build, then they may re-value the property the next tax year.
What are your chances in an appeal?
The staff member I spoke with told me to encourage any clients who felt their valuation was out of whack to appeal. They realize their model is a statistical approach and does not have the personal eyes on approach that an individual property owner can bring to the table. When I asked about an example property that had increased in value 20% in two years in this market with about 4% annual appreciation, his comment was “Either we got the previous valuation wrong, or the current valuation is wrong, or both It should be appealed and a fresh look taken”. Now if the previous valuation was way too low, you may not get any satisfaction this time around.
Appeals cause a “Do Over”
I was told that when an appeal comes in, the previous statistical model and result is set aside and the staff looks at the evidence the property owner provides along with specific comparable data they have. So it is a fresh look. I got the impression that if your comparable sales are reasonable, and are in fact similar to your property, you have a good chance of a successful appeal. Of course they will likely apply adjustments for condition, property specifics, and date of sale to arrive at a new valuation.
Gather Appropriate Comparable Sales Data
This is where I can help. Contact me and I'll help you find appropriate past sales to evaluate relative to your current valuation. These sales need to be "time-trended" from the actual sales date up to the valuation date of June 30, 2008. Here is a great link to help you understand this process and know the trend factors that Boulder county uses.
http://www.bouldercounty.org/assessor/sales/timetrend/using.html
Don't try to fool the assessor!
Given that they have some pretty good info from MLS listing sheets (photos, descriptions etc), it is probably not a good idea to send them the lowest sales as comps if they really are nothing like your property. They might tend to dismiss appeals with foreclosure and distressed properties that are in very bad condition if there are more appropriate sales to look at.
What about counties other than Boulder?
Boulder County is my primary market area and I did not speak to other assessor’s offices. But you might want to contact them yourself if you live in another county. The fellow I spoke to was extremely friendly, helpful and spent a good deal of time with me on the phone.
Questions?
Please don’t hesitate to call me if you have questions about this or any other real estate topic.
