Good Grief!
Unless you’re an idiot — like me — if you own a home, you probably should have grieved your property taxes over the last couple of years, maybe even more than once. It’s almost a sure thing that your municipality has been assessing your home at more than what it’s worth — and that you’ve been paying your taxes on that inflated value. (Many tax bills, like mine, include the value at which the municipality is carrying your property.)
I speculated that grievances, and the reduced assessments that I figured went along with them, were going to be yet another problem for already-strapped municipalities and that, given the state of the real estate market, this would play out nationwide. Looks like perhaps I was wrong:
I live in a community of about 5,500 households and a smattering of commerical businesses. Curious about what was going on with regard to grievances, I filed a Freedom of Information Act (FOIA) request. This is what I got back (all calculations are mine):
In 2008, there were a total of 227 grievances filed (ed. note: both residential and commercial; unknown the number of each). Of the 227 grievances filed, a total of 64 assessments (28%) were reduced by the Board of Assessment Review.
In 2009, there were a total of 551 grievances filed (+143% over ’08). Of the 551 total filed, 41 assessments (7.5%) were reduced by the Board of Assessment Review.
Here are my three takeaways:
1) That even in 2009 only 10% of property owners grieved their assessments. The other 90% are apparently idiots like me.
2) That in 2008 only 28% of those who grieved got relief and,
3) That in 2009 only 7.5% of those who grieved got relief. What kind of sick joke is that?
I suspect it’s possible that municipalities have been digging in, denying grievances in the hope of hanging on to one of their main streams of revenue. After all, how far is the typical homeowner willing to go to shave some bucks off his tax bill? Probably not all the way to court, with its attendant attorneys fees and inconveniences.
Any interesting stories out there?
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March 4th, 2010 at 1:32 pm
I had been pretty irritated with this as well recently, but this year our assessed value for property taxes actually went down by $20K or so, so it appears to be catching up to the reality in the market.
March 4th, 2010 at 1:48 pm
Assessments are all relative…the only time you truly have a grievance is when your property is over-valued MORE than others with similar homes.
Basically, your town has a budget and taxes correspondingly with the needed assessments. Some towns don’t assess on market value, but have a “relative” assessment that the tax rate is based on.
If everyone in your town successfully got a grievance, and reduced their assessment 40%, the town would just increase the tax rate an equal proportion to make the numbers. Not to say there wouldn’t be screaming going on, and that it would be easy, but just close a school here and a firehouse there and pretty soon the new rate is accepted.
In Massachusetts we have Proposition 2 1/2, which is a great tool to keep towns honest…can only raise the budget 2.5% a year (without specific overrides voted on by the residents…for school expansion or to keep the firehouse from closing for example). But even with 2 1/2, the budget is the budget, and if everyone got their assessment slashed in half, the town would just double the rate, since the budget would still be flat…
March 4th, 2010 at 1:49 pm
My assessed value for a given year has consistently been about 20% under values that my house would sell for on the market, by my best estimation. This includes the year I bought my house (i.e. my valuation was about 20% less than what I actually bought the house for that same year). And that was back when prices were pretty steady. It’s kinda’ hard to grieve the valuation when they simply value every property under it’s market value. During the couple of years that the market was dropping 20% a year, it basically meant that the valuation was close to correct, making it still not worth fighting. I’m sure your mileage varies based on where you’re at.
March 4th, 2010 at 1:49 pm
In my community the deal is that “distressed” sales are not counted into the equation. This is by law and cannot be challenged (successfully). So within a year the land I purchased at auction was taxes at twice the price I payed for it at that auction. I think the reason for the increased number of challenges are absurdities like that. The reason none of them are successful is that the exclusion of “distressed” sales from valuations, so far has not been challenged successfully in the court system.
March 4th, 2010 at 1:51 pm
I was basically told I had no case. I think the only way you can make it happen is by going back LATER (ie, now in 2010 you could fight a 2007 or 2008 valuation) by proving that the comps that were used at the time were fraudulent. ie: the same comps were then foreclosed on and sold at much lower values.
When I tried to fight my 45% over-valuation, the assessor basically told me I had no case.
March 4th, 2010 at 1:52 pm
My understanding is that property taxes are allocated based on your value relative to the total value of all assessed properties. So, the municipality collecting the taxes isn’t directly impacted by reductions in assessments because all that does is re-allocate the total property tax collection accordingly. So, anyone fighting for an assessment decrease will only be successful in reducing their property tax to the extent their relative proportion of the total assessed values goes down (which certainly can be worthwhile since most people probably don’t bother fighting).
Of course, there is an indirect impact on the tax collecting body – falling assessed values = poor economy = harder to justify current tax levels and tax increases.
March 4th, 2010 at 1:59 pm
I filed the required 3 copies of my appeal of my Mother’s assessment with the Lake COunty (Ill)Board of Review in September 2009. Graciously they arranged a haring I was permotted to attned by telphone (from Washington DC). It began on time. The Board member asled me what did I ahve to say. I replied that in light of my 35 page appeal, I wondered what questions he had for me. He replied he had not read the file.
Since then the Board has (1) denied my appeal , with no explanation ; (2) denied my FOIA requerst for details on the data and methodology they used to deny th appeal; (3) sent me electronically a copy of my file (this after telling me in the fall they did not use email to accpet appeals/communicate–only snail mail) Said file consisted of what I had submitted in Septmeber plus a copy of their denial of my appeal)
When I forardede all of this to the Lake COunty Board of Supervisors, their resposne was We have no control over the Board of Review–most convenient for them b/c otherwise assessments/taxes might have to go down.
Ome understands the frustration/contempt people have for government.
March 4th, 2010 at 1:59 pm
@david: the assessor basically told me I had no case
And the lawyer you consulted who knows his/her way around your municipal ordnances said… just cave to whatever the Tax Assessor said? I doubt it.
Sometimes there’s a narrow annual window within which to file tax abatement grievances. Bottom line: talk to a lawyer who knows your state and local property tax laws.
March 4th, 2010 at 1:59 pm
Last year I filed for reduction of a single-family home in Houston. I was seeking 26% but got exactly half that: 13%. It was my first attempt to reduce assessment in about 9 years. I had firm offers in hand showing market value to be 26% under assessed value. The community the home is in is not distressed.
March 4th, 2010 at 2:04 pm
My dad sees his taxes increase year after year even though his property value has gone down by a huge amount. The reason is that there is a cap on the increase on the taxable value of the property each year, so he’s still paying less than the actual taxable value. On one hand it protected him from the giant swing upwards, but he’s still paying more each year. It’s been added to Barack’s socialism and death panels as a sign of the decline of America.
March 4th, 2010 at 2:06 pm
The real reason most people are unsuccessful at getting their property taxes reduced is that they do not understand what evidence is required to convince property tax authorities. The BEST evidence is a sale of the property in close proximity to the assessment date. The BEST evidence if you have owned your home for a while is an independent appraisal. It will cost you a couple hundred bucks to get it done, but it will lead to a reduction in your property taxes to their true value.
March 4th, 2010 at 2:09 pm
I managed to get a 40% reduction in the tax assessment value of my home using an independent appraisal as evidence.
March 4th, 2010 at 2:43 pm
Take a look at your home insurance bill if you want to trim costs without fighting city hall. I found a definite flaws in my home valuations. Back in the good ole days before real time valuations were available from Zillow etc a lot of homeowners got a once a year rush when they saw their home value had increased at least according to their (replacement) insurance bill. You don’t want to insure dirt so a little analysis is necessary to determine a reasonable split of land vs structure with your valuation, a sanity chceck on what your insurer is billing you.
I have a 100 year old vacation home and I was only insuring it for the mortgage value because the bank required it, at least 100% of the market value was in the land. Without opting for any “inflation protection” or “replacement cost” BS I found Liberty Mutual had been escalating the home’s value. (the value of furnishings is % locked into the home value). I called them up and told them I wanted the coverage reduced to the mortgage value. They refused to do it at first,we argued a while about whose decision it was mine the customer or theirs. Then they said they had to get a manager (from another state) to approve it- so they put me on hold for awhile and finally agreed my number.
My primary residence was even more outrageously valued – pretty close to the land & structure combined! I called Lib Mut again and told them the amount I wanted to insure (no mortgage involved) and asked the rep where in hell they got the value they were billing me – she said didn’t know but refused to the reduce the insured amount until I completed a 20 minute questionnaire over the phone ( was pissed enough to go complete the questionnaire (any stained glass windows?).I’m sure the 20 minute questtionare is pulled out when people want to reduce their values).Surprisingly the questionnaire produced a value much much closer to the value I wanted insured than what Big Brother Liberty Mutual was imposing.
And don’t believe the BS that construction costs have been going up even while home values have declined.And don’t expect a jackpot payoff if you have been overinsured, they want to cash your checks not issue them to you “oh, you don’t have a video of the contents or receipts, welll” (maybe I should go to a swanky open house and video the contents LOL)
March 4th, 2010 at 2:45 pm
Santa Clara County, Nor Cal:
Last year, I reduced the assessment ~10% by filling out an online form and providing evidence 3 comp sales (ie, I linked to Zillow pages). Time: <30 minutes.
I thought the assessment was still too high. I filed an appeal and got another 05% reduction. Time: <15 minutes.
The office was overwhelmed with activity. The story was in the newspaper, or I never would have thought of it.
March 4th, 2010 at 2:46 pm
Cook County in IL (chicago) has a 3 year cycle. Our house was just re-assessed last year, and for some odd reason our assessed square footage went down, even though we added an addition.
Total bill went up, and Cook County is employing a new trick: 1st bill of the year (February/March) is 55% of the total instead of 50%. 2nd bill will in theory be lower.
March 4th, 2010 at 2:53 pm
Talking about real estate values I’ve noticed a healthy number of teardowns here in Spring Lake NJ, I bet it’s approaching the good ole days 2002,3,4,5,I’m thinking Wall St bonuses and availability of construction, it’s definitely a microcosm but it is happening.
March 4th, 2010 at 3:29 pm
My wife and I are in a protracted battle with the property appraiser’s office. We have had six hearings on this over the last two two years. They are not following the State laws and the “adjustment Board” does anything and everything it can to dismiss cases. We suspect the independent Hearing masters are anything but independent.
They now automatically have the Department’s lead attorney in every meeting that we hold with the property appraiser’ office. We have had to go so far as appeal to the County board of reagents to get extensions and keep our issue alive.
The State passes laws actually favoring home owners but the magistrates and attorneys claim ignorance. “You can’t take the law literally. It really doesn’t mean what it says. I helped write these laws and I don’t recall that being the intent.” (dance, dance, dance, deny)
Good Grief!
March 4th, 2010 at 3:31 pm
Dude who works in the office next to me tried to get his tax lowered (King County, WA), but the government office claims that there is a huge backlog and that it will take a while for them to look at his request. He’s been waiting for over a year now.
March 4th, 2010 at 3:34 pm
Our’s went up when prices were dropping. These greedy b@stards did the numbers in 2007, at peak.
Morons.
I went in with my wife armed with Case Shiller charts, local stats, and a bunch more. The 2 sh*theads (one an appraiser and one a “representative” for the p*ssy county rep) crapped a brick when I told them about the economy.
They knocked our value down a few grand (it had gone up like 60 grand.)
I didn’t bother going through the grievance because these people are greedy whores who just aren’t smart enough to work for the big scumbags who profess to be doing God’s work.
One thing about the mafia – at least they are honest about what they do, they don’t put Jesus fish on their doors and play saint while they are shafting you. I have a LOT more respect for them.
March 4th, 2010 at 3:35 pm
PS Rest assured the next cycle of appraisals won’t be done – these scumbag counties will claim they can’t afford the appraisals so they can keep the prices at or near the peak of the bubble.
March 4th, 2010 at 3:44 pm
I own a dozen houses and the county has been fairly good at dropping the assessment levels to follow the market. Since this is an annual activity they are typically 6-9 months behind the curve, but that is to be expected.
Last time around I thought that 8 of the assessments were +/- 5% of fair market so I accepted them. I challenged 4 of the assessments using 3 comparable sales for each property from my realtor. Of these 4 the county reduced the assessment and came fairly close to my number on 3 properties.
On the last property they denied my challenge. I had to pay for a full appraisal to win. In my county a full appraisal is accepted as gold no questions asked. Unfortunately they don’t refund the 300 bucks for the appraisal when I am right and they are wrong.
The key to winning these appeals is to provide good, objective proof of your numbers and to actually have a case. Assessment procedures vary by county. To get more specific details on your own county’s machinations talk to a landlord who owns several houses. These guys typically know how to get an assessment knocked down to a fair value.
March 4th, 2010 at 3:46 pm
To the Cook County commenter above: The 55% move was apparently designed to balance out the two payments since that amount is based on prior year and the second payment will factor in an annual increase. See the article below for the explanation and some time honored Chicago politics. Illinois law also recently changed to stop “limiting the increases” in property taxes.
http://newsblogs.chicagotribune.com/clout_st/2010/01/cook-county-homeowners-to-pay-more-in-first-installment-of-property-tax-bills.html
March 4th, 2010 at 4:21 pm
In Kalamazoo Mi the issue is that while they will agree with you in general that property values have declined, there aren’t enough comps to prove that your individual property has gone down in value. Foreclosure and short sale prices can not be used in the calculation. So – DENIED!
March 4th, 2010 at 4:45 pm
“Ownership”.
“Private property”.
Those quotation marks won’t protect you from the coercive power of the State. (especially one that is short 13 billion USD)
March 4th, 2010 at 5:07 pm
Los Angeles county has been very good at reassessing, or at least in my experience they have. My property taxes have gone down significantly over the last few years. Total drop to date is about 40%. I know from friends that Orange and Riverside counties are not so good – they reassess the value of the property lower but increase the value of the land.
March 4th, 2010 at 5:28 pm
A number of people think the value and property taxes they are paying now are based on current valuations. But they are not. I am sure each state and locality are different in the exact time windows they use but I have some rentals properties in Dakota County Minnesota. The county has actually been very good at being reasonable and the recently released 2010 values for 2011 taxes are spot on. The 2009 values are far too high but there were no comparables in the time window so its proving difficult to challenge but they have agreed to do a wider search comparative analysis.
However the details specific to this MN county are the following:
Taxes paid in 2010 are based on the valuation that was done in January of 2009. The valuation for January of 2009 is based exclusively on comparable sales from Oct 1, 2007 to Sept 30, 2008. Taxes are paid on May 15th and Oct 15th of each year. So for taxes paid on Oct 15th of 2010 the value that sets those taxes could be based on sales from as far back as Oct 1 of 2007, 3 years previous. This causes the great disconnect between many people thinking their values are wrong. And it really feels egregious in a rapidly declining market. But it’s the same for everyone and if everyone’s value is too high it doesn’t change overall taxes. The value will eventually right itself and when the market is going up like it usually is, its slow to pick up the increase as well.
March 4th, 2010 at 5:54 pm
Wake County, NC revalues every 8 years. Last was Jan 1, 2008
county valuation Jan 1, 2008: 480K
fhfa calculator for Q4, 2009: 490K
current zillow: 444K
fhfa calculator for Q2, 2009: 500K
fhfa calculator for Q2, 2008: 506K
fhfa calculator for Q2, 2007: 486K
fhfa calculator for Q2, 2006: 456K
fhfa calculator for Q2, 2005: 431K
I think zillow peaked around 560K, but I can’t find that at the moment.
This area wasn’t bubblicious and any place we wanted to move to was, so still in NC.
Y’all should be watching this stuff. Just add it to the list of 2 billion things to track in our free-market-”we-give-the-consumer-choice” bs state of things. ;-)
March 4th, 2010 at 6:45 pm
Ya well taxes are a hot button issue and everybody is up to date on r.e. on their block. Well your assessor isnt. First there is a time lag and second, in many states there are parameters for valuations so this is one of the few games, like horse shoes, where close counts, and that is the best you’re gonna get. No harm in trying. You can ask for personal attention, hire a tax rep, or an attorney, but neither of them will apologize if they’re wrong an you have to pay for their expertise.
March 4th, 2010 at 8:05 pm
Hey Barry, why not have a go, even so far as going to court. You could put a Class action together with neighbours and represent yourself using some data cobbled together from a friendly local RE Agent. It might not be a good idea to ask NAR for help!!
It might be fun and could provide material for articles or a chapter in a new book?
March 4th, 2010 at 9:57 pm
Most states, cities, town, municipalities are in debt. Do you think they really want to be lowering your property taxes just because your property value has gone down? No way. When’s the last time the teachers in your districts took a pay cut? Ain’t going to happen. Taxes keep going higher to fund those nice pensions and benefits that the unions have sucked out of the taxpayers for their workers.
I live in Pennsylvania. The state is bleeding red, and its only going to get worse.
http://www.commonwealthfoundation.org/research/detail/pennsylvania-pensions-and-taxes
March 4th, 2010 at 10:07 pm
There’s another problem here to which I can attest from personal experience. My home in Denver was assessed 5% HIGHER this past year, and I did grieve it. Their argument was that there had been no transactions of comparable value within the neighborhood! I told them that was because there was no liquidity in the market and so the basis of their argument was flawed. I even offered to put up my house for the assessed value to see if there would be a bid. They weren’t interested. Of course, I lost.
March 4th, 2010 at 10:17 pm
So…more taxes for the willing?
I will use every legal tactic available and reduce my property appraisal to a level that represents fair market value.
Remember, we are responsible to pay the least amount of taxes owed.
March 4th, 2010 at 10:19 pm
Barry. I live next door to you in West Egg. It ain’t easy to grieve your taxes here. You have to do it every year and if you get someone to do it, you end up paying 1/2 the savings.
Time is money too.
March 4th, 2010 at 10:44 pm
“I speculated that grievances, and the reduced assessments that I figured went along with them, were going to be yet another problem for already-strapped municipalities and that, given the state of the real estate market, this would play out nationwide. Looks like perhaps I was wrong”
I don’t know BR, you live in a pretty cosy place in Nassau County and from what I understand, real estate markets are all local.
I remember a chart you posted some time ago showing properties in New York having gone up 12% despite the current crisis, Great Neck I’m sure is no strapped municipality; a few pot-holes maybe, but not strapped.
March 5th, 2010 at 6:47 am
I’m a real estate professional in Cook County, IL. Unfortunately, property tax appeals aren’t my area of expertise.
Cook county is very much in the red, and for those armed with unscrupulous knowledge and connections, the perks can be staggering.
There are more loopholes and strange idosyncrasies than you could imagine here. I almost don’t even know where to start. If you are looking to get your propoerty taxes reduced, I strongly suggest talking to an attorney that is well connected or at least understands how “the machine” works.
Looking for a good quick story?
Do you own two properties in Cook County? Are you married?
A very common tax reduction tactic employed here is to put your spouse’s name on one property tax bill and yours on another. Don’t forget to claim homeowner’s exemption on both properties and send some mail to the properties. This can end up being an absolutely huge reduction in your tax burden.
I’ve spoken with several attorneys about this and they told me that it is some sort of civil penalty if you get caught which means that you probably have to pay back the money after some sort of hearing, appeal, etc. Here’s the funny part: You can’t get caught. I tried to blow the whistle on a married couple a while ago and a clerk looked up their information on a DOS system and determined that since the names on the tax bills for the respective properties were different, no crime had been committed. I offered to provide more evidence, but they didn’t care. Thanks Houlihan! (Cook County Assessor)
On another note…
Hey, I just found this site. I’ve been looking for something like this for years. This is so much more fun than some of the large news organizations that employ user profiling and probably get more news from me surfing their site than I get from them.