The Basic Common Errors on Property Assessment Data in Real Estate

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Basic point

  • Square footage of lot incorrect
  • Lineal footage of lot incorrect
  • Land restrictions (wetlands, building moratoriums, etc.) incorrect or not accounted for
  • Style or usage (residential vs. commercial) incorrect
  • Age of structure incorrect
  • Condition of property – more worn out or obsolete than indicated – kitchen or baths are outdated
  • Square footage of structure incorrect
  • Square footage of air-conditioned areas incorrect
  • Number of total rooms incorrect
  • Number of bedrooms or bathrooms incorrect
  • Size of the garage (one vs. two-car garage) incorrect or carport listed as closed-in garage
  • Amenities (pool vs. no pool) incorrect
  • Window air-conditioning units vs. central air-conditioning
  • Major damage not accounted for (fire, wind or flooding damage)
  • Septic tank vs. sewer connection
  • Type or quality of roof incorrect
  • Flooding issues not accounted for (flooding of the street during rain storms)
  • Nearby conditions not accounted for (rental apartment buildings, malls, dumpsites, airports, etc.)
  • Zoning restrictions or easements not accounted for
  • Statutory guidelines not followed
  • Increase of assessment greater than allowed by law (homestead exemption limitations)
  • Valid comparable ignored or eliminated from valuation
  • Computation of tax amount incorrect

CAUTION:

Be wary of arguing that the property is in disrepair or has deteriorated substantially.  When arguing that the property is in disrepair, damaged or otherwise not in the same condition, but worse, as the properties surrounding it, bear in mind the risk involved in doing so.

The municipality’s Property Appraiser’s office (or Property Assessor’s office) may alert other agencies or departments of the condition of the property.  By forcing the repair and following its progress to completion, the Property Assessor may then be able to reassess the property and arrive at a higher assessment at that time.

Of course, if the property is damaged by some calamity such as fire or windstorm, the Property Assessor should be able to understand the circumstances and not follow suit with a reassessment once the repairs are completed.  Another issue to consider is when an addition or improvement is done to the property.  The Property Assessor will inevitably want to reassess the property at a higher value.

The Three Appraisal Methods

Property Assessor may use three different approaches to evaluating your property.

The most common approach is the Comparable Sales Market Value Approach.  Here, the subject property is compared to similar properties (also known as comparable) recently sold within a one-mile radius.  Any differences between the subject property and the comparable are taken into account by making adjustments to the comparable’ sale prices.

The resulting sales prices (after adjustments) of the comparable are then averaged to come up with a value.  This value is presumably the Market Value of the subject property.  This is the method used by the Property Assessor’s office to value and assess residential real estate (less than 9 units).

A second approach is called the Cost Approach.  This value analysis is based on the cost of the land plus whatever it costs to rebuild the structure.  Adjustments (or depreciation) are made based on the age of the structure.

The resulting figure is the value of the property.  This approach is not always accurate, which is why it is not as commonly used.  This method, however, may be effectively utilized when appealing taxes on new residential properties.

Finally, you have the Income Approach.  This method takes the rental income of the property and analyzes it as an income stream annuity, taking into account all expenses of the property (for example, electricity, water, insurance, etc.) and the inherent risk of the investment.  Obviously, this method works best with rental properties, whether residential or commercial.  This method does not work well with single-family homes, even if it is income-producing property.

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