In the past two weeks, my phone has been ringing off the hook with tax appeal work. That’s because the Cuyahoga County Auditor’s office recently sent out notices to home owners with proposed revisions to their property assessments. The County Auditor performs a re-assessment every 6 years.
As you might imagine, with market values increasing in the area in recent years, many are seeing this increase reflected in their home’s assessed value. Some of the increases are surprisingly high! Check out the video below.
What can a home owner do?
The auditor has provided a window of time in which their proposals can be contested. For Cuyahoga County, home owners have until August 31st 2018 to submit documentation they feel supports a lower assessment.
Here are a number of documents that they will consider:
- An appraisal completed by a state licensed or certified appraiser that has been prepared within the past 12 months.
- A total replacement cost of a new structure provided by a certified builder.
- Photographs of structural damage, and estimates for repairs.
- A purchase agreement with closing statement.
- Certified estimates from a contractor for repairs cited as the reason for a change in value.
Hiring an appraiser is a good way to contest their proposed assessed values. Here are some things to remember about appraisals for this type of purpose.
Appraisers cannot use distressed sales. Sometimes my clients point out bank (REO – Real Estate Owned) sales or other distressed sales that have in their neighborhoods recently. These are not good market indicators and cannot be used. In fact, the Board of Revisions will not even consider that type of sale when contesting assessed values. Some feel that those sales will ‘pull-down’ their market values. Most of the time this is not the case. 
Bank or distressed sales will typically only have a major impact on your home’s value if they become the majority of the sales that are selling in your neighborhood. Likewise, a sale or two that has sold for much higher than most other sales in your neighborhood, will likewise not have a major positive impact on the market value of your home if those sales are superior to your home.
If you have purchased your home within the past 3 years, the board of revisions usually goes by the purchase price of your home and will not typically consider lowering your home’s assessed value until three years after your home has sold.
While we all want to have our homes valued as low as possible, we have to remember that it is not fair to low-ball values when a higher market value is supportable. The market value is what it is. It is not lower when appraising a property for tax reduction and then higher when appraising a property for lending. That being said, there are times when the assessed value is higher than market value. I have helped many people to lower their taxes. There are some that I have not been able to help because the auditor’s value is supportable and sometimes even lower than market value.
It should be noted that many assessors use, among other techniques, mass-appraisal as one of their methods of estimating the assessed value of your home. This is a market-based approach in which many sales, including sales that are not comparable, are used. Components of value like gross living area, bedroom and bathroom counts and things are assigned a value based upon statistical models and then applied to the subject property. When an appraiser is hired for a tax appeal appraisal, we do not use a mass-appraisal method. Instead we consider numerous comparable sales, which may lead to a more accurate value than mass-appraisal techniques provide.
WHAT TYPE OF APPRAISAL SHOULD YOU ORDER? FULL APPRAISAL WITH AN INTERIOR OBSERVATION OR AN APPRAISAL WITH AN EXTERIOR VIEW ONLY?
I highly recommend contacting your auditor’s office before ordering an appraisal, just to make sure that you know what they will accept. Often times a “drive-by” appraisal is acceptable. With this kind of appraisal, appraisers make notes about their observations of your home from the street. We use same data that the County Auditor is using to value your home, including but not limited to condition, quality, gross living area, bedroom and bathroom count and so on. We do also rely on MLS data and other available data sources in obtaining information about your home, including anything information that you may share about your home. In my estimation, this is a fair way of performing an appraisal for this situation. And it is less expensive!
I have been performing this type of appraisal for years, for tax appeal work, and have never had the Cuyahoga County Board of Revisions give my clients any issues with this type of reporting. In fact, I have personally testified in front of the Board of Revisions in numerous counties, after having performed a “drive-by” appraisal. Boards of revision have never made any indications that this kind of report is an issue. Their notice says to obtain a “Complete Appraisal Report”. That wording does not imply a “full appraisal” in which the interior is viewed. It just means that a state licensed or certified appraiser needs to complete the appraisal. I think that a “drive-by” appraisal is a good way to go many times.
FULL APPRAISAL WITH AN INTERIOR OBSERVATION
When performing a full appraisal, I will walk through your home and take pictures of any conditions or repairs that might have an impact on market value, both positive and negative. Sometimes a full appraisal is beneficial if the home is in poor condition. Perhaps the auditor is reflecting a superior condition. In a full appraisal, the appraiser can take photos to demonstrate to the auditor the condition of your home which may support a lower assessed value. Additionally, if you feel that the gross living area of your home is smaller than what the auditor is reflecting, a full appraisal, in which the appraiser will measure your home, may be a good idea.
Here’s a word of caution for you. If your home is loaded with upgrades, while appraisers will not report their findings to the Auditor’s office, when you submit the appraisal to them, it becomes part of public record. Something to keep in kind. If I am appraising a home that is superior to what the auditor reflects, I have a moral and legal obligation to document this in my report and value your home accordingly. I cannot “un-see” or “un-hear” facts about your home in my valuation process and appraisal report that might actually cause a major increase in the market value of your home.
One last thing to remember. If you hire an appraiser, they cannot offer a refund if the estimated market value does not help your case. That is because our fees cannot be based upon specific assignment results, including the value estimate. If you think your assessed value is too high, I do think its worth hiring a state licensed or certified appraiser to try to help you. Many times appraisers are able to help! Even if the results of my appraisal are not lower than your proposed increase, at least you’ll know the tax increase is fair. There’s value in knowing that!
If you’re interested in a comparison of sales information from July 2018 vs. July 2017, check out my monthly County Market Report below. If you’re interested in trends and other helpful information in a specific city, check out our City Trends Reports. Both can be accessed from my blog’s home page or at www.aspenappraisalservices.net.
Here are some other articles and videos I enjoyed this week! I hope you will also.
Incomplete Housing Logic Through Song and Happiness – Housing Notes by Jonathan Miller
How would you know if the market was starting to tank? – Sacramento Appraisal Blog
5 Reasons To Include an Appraisal in the Estate Planning Process – Birmingham Appraisal Blog
Bye-bye 1004MC, Hello Analysis – Ann Arbor Appraisal
Nice job Jamie. I appreciate the honest approach here to explain how it works to owners and let them decide if this is relevant or not. Too many times there are unscrupulous tax appeal companies that target owners and it’s just a money grab. In my area these companies take about 40% of any savings once a refund is issued, so what the owner ends up paying could be astronomical compared to hiring an expert to assist in coming up with a valuation.
Thanks Ryan! I can’t stand companies that capitalize on people’s bad situations. I have found, as I know you have, that being honest with people and helping them decide what will help them most, usually ends in repeat clients down the road. Greed never pays in the long run.