Real Estate Assessments - worth challenging?

[2buttons]

Anyone challenge a real estate assessment?  Ours went up significantly, and therefore increasing our mortgage payment by $120 a month.

Has anyone challenged their assessment? Worth doing? Things to look out for?

[TheThirstyStag]

I imagine it depends on the municipality.  Some make it easy and a matter of filling out a short online form.  Others are more antagonistic to the process. 

Do you have easy comps to use as counterexamples in your neighborhood? 

[Kaydedid]

Haven't done it personally, but know several folks who have and saved a huge chunk of change.  How does your new assessment compare to selling costs of similar properties in the area?

[Fishindude]

I don't understand?

A mortgage is with a lending institution and that payment remains the same through the life of the loan, unless you have a variable rate loan.  It's all based on how much you initially borrowed.   In my experience, the only time the financial institution does and assessment is when they originate the loan, to make sure they are not loaning yo more than the property is worth.

I get an assessment from the county that establishes the rate of local property taxes.   Those assessed numbers occasionally change, changing my taxes.
Are your local property taxes included in your loan payment?

[2buttons]

Yes property taxes are wrapped into the loan, so if the property taxes increases it increases my escrow amount, which technically does not increase the mortgage payment, but it increases the amount I have to provide to the mortgage company who pays my real estate taxes.

In terms of comps, yes there are some good comparable that would put the value at tens of thousands less.  I did some scouring online and sometimes its a "driveby" assessment, so challenging it might at least provide for more accuracy.  I doubt it would go higher. I think I am going to give it a shot.

If anyone has done it, please chime in.

[PadAdventure]

I second, or third, or wherever we are, that it depends on where you live, and what's involved.

I tried it on my primary home, and a few rentals, it was a lot of work and the amount that they took off the primary assessment wasn't worth the time or effort.

To significantly decrease the time spent researching, and to provide some comps that are rock solid, get with someone who has access to the MLS (realtor), buy them coffee or something.  They can plug in the code for your area of the city and instantly bring up recent sales according to your parameters.

Other options are, if it's a multifamily in a primarily single family home neighborhood, you can highlight it's lessened desirability, depreciation, etc.

Where I live they flat out told me I could not file for reduction of investment/second homes. 

Those would've been easy.

The process seemed simple enough, but the results weren't as encouraging.  It's still probably worth a try though.

Log on to your appraisal district's website for instructions.

Good luck!

[caracarn]

I look at how the assessment lines up with the value.  In the areas I have lived in assessed value is normally 33% of market value.  As long as that ratio stays intact, even if it goes up (had a big jump just this year on my current house) I know there is little that can be saved so I just leave it.  That is the method I would propose to determine if it is worth the trouble.

[StacheInAFlash]

An annual increase of $1440 in property taxes seems huge to me! How much were your taxes before? What is the percentage increase that this actually reflects? If this percentage increase is greater than 10%, I would absolutely challenge it as that is quite extreme.  Does a huge increase in your home value make sense (in my area, this $1440 increase would reflect a jump in home value of about $150,000) based on what market conditions are showing? In general home prices are rising again, but that tax jump seems to reflect a huge increase in home prices.

Also, are you certain the issue is an increase in your home value, and not just the mill rate increasing in your area? Perhaps a combination of the two? Also, did you make sure your taxes aren't going up due to some infrastructure improvements, like new road or sidewalk in front of your house that you are completely or partially responsible for funding?

My experience with challenging home values is this: Almost everyone who goes in front of the assessment board (or whatever it is called in your area) gets at least a partial reduction. It is a lot like calling the cable company to bitch about your rate...they'll throw you a new discount to keep you happy for a bit longer, but sooner or later it will go up again.

[Mrs. PoP]

We successfully challenged ours the first year after we bought our house.  It wasn't painless and we did have to take work off to go to our hearing with a magistrate, but it was important for us to lock in the lowest possible starting point from a homestead exemption and capped increases perspective.   

[Frankies Girl]

I live in a state where they fully expect you to challenge tax assessments on your property and I'm shocked at how easy they make the process. There are even reputable companies to challenge the assessments for you (reassess a fair price and go in person to represent you for a small fee - only paid if they get a reduction on your assessment).

That being said, it was very easy for my house. I've done it the last 3 years. The county tax assessor's office provides paperwork in the package to protest. You can do it online or by mail. You'll need to check in with your local office to find out if they don't make it really easy to figure out (did you check through all the paperwork they sent you to see if they have a protest procedure?)

I protest based off the idea that my house needs major repairs and is very basic builder grade everything, and would not sell for anything near the average market price. I take LOTS of photos, set up a word doc containing them and descriptions of the problems and in the case of several comparisons also pointed out where I have builder grade items installed, while the houses they are using as a basis for comparison have upgraded items (like cabinets/countertops, flooring, etc).

This is the one time where you want to sell someone on just how awful and messed up your house is. So I don't hold back - anything that needs repairing or is deteriorating is fair game. Special emphasis on roof, electrical, plumbing and other structural issues. Cosmetic stuff like paint or carpet are not usually weighted very heavily, but when I show up with PAGES of stuff, they take into account that replacing carpet or painting a whole house might also cost some money and need to be included in an overall assessment for value.

I've never failed to get a significant reduction using clearly labeled photos (and I do make copies - one for me and one for them to keep). So for about an hour of taking photos and then labeling them in a doc, then printing out a few copies and then attending the actual meeting (maybe an hour waiting around, and 15 minutes to go over everything?) I have gotten at least a 15% or better reduction.  I think it's worth it.

But if your house is relatively new and has no real issues, you would have to rely on the comps for what homes are selling for in your area. You should be able to pull that up through websites like Realtor.com or like someone else mentioned, check with a real estate agent, but you might be screwed for any significant reduction if your area is hot and houses are selling at a premium.

[2buttons]

It just took me 19 minutes to file online. With the help of zillow on recent sales - had to be in the last year - and cross referencing the property assessment real estate database for similar assessments, it was fairly easy and straightforward, I just had to do some juggling of data between browser windows.

My real estate assessment went up $46k, which I think is absurd. We bought last year, so I am sort of wondering if they try to push the envelope the year after you purchased with the thought that no one will bat an eye.

Will update when I get my response. Another thing I found that was interesting, is you really only have a few weeks from the time you are informed of the change and the time to file an appeal. 

Hopefully squeaky wheel...

[StacheInAFlash]

My real estate assessment went up $46k, which I think is absurd. We bought last year, so I am sort of wondering if they try to push the envelope the year after you purchased with the thought that no one will bat an eye.

And how does the new assessed value relate to what you paid for your house? Does the $46k increase make the assessed value similar to what you paid, or $46k higher than what you paid a year ago?

[zephyr911]

I fought one, got a few grand knocked off but nowhere near appropriate value regardless. I bought for $177k with lots of upgrades, the developer failed and all remaining units were sold off at $130K, and the county actually told me they couldn't use that as a comp because it was prior year numbers only. But I did get them down from a five-figure increase... I don't remember if it was 180-something or 190-something, but it was skewed by the townhouse being in a high-end neighborhood with mostly huge and beautifully furnished McMansions. Anywho, got back to sale price, which was better than nothing.

[2buttons]

And how does the new assessed value relate to what you paid for your house? Does the $46k increase make the assessed value similar to what you paid, or $46k higher than what you paid a year ago?

Its about $20k above what our appraised value was.

[Arktinkerer]

If you have good reason to challenge it I would suggest you do so.  I challenged twice and got a reduction both times.  First time I had an actual appraisal.  Second time I showed the rent (we rented it out) did not justify their valuation.  That said, the first time one of the Einsteins on the review board said "The sales price doesn't matter" and the second time another said "An appraisal doesn't matter."  Really?  Then its just whatever they want to charge????

[SwordGuy]

If you can find some grounds to do so, go for it.

I got a whopping big assessment on my US house while I was working in Ethiopia.  I was able to go online and compare how my neighbor's houses had been assessed.  The percentage change was all over the map, anywhere from 16% to 900% on a 7 property and 1 mystery lot street.  (And it's a small street, too.

There was no rhyme or reason to the differences in valuation.   The biggest driver was my neighbor's house, which had sold for a hefty price.  I was able to point out that we no longer had a deck and that my neighbor's house had sold for a whole lot less just one year earlier.  The reason it sold for so much more was because a contractor bought the house and poured 50,000 in improvements into it.  I pointed out that we had not done any such improvements.

I was able to do everything over the internet (at 2K download speeds on a good day) except mail in the form.  My wife back in the US printed it out and put it in the mail.   It took me about 3 hours and saved me about 500 a year.   If I had had US internet speeds I could have done it in less than an hour.

Go for it!

[2buttons]

I won my challenge. In the end they increased my assessed amount by $1k, not the original $46k. 

One key takeaway. Be really nice when you do it.  Apparently a lot of folks treat them like garbage, and based on anecdotal evidence my challenge went through rather quickly because I was not a jerk. 

[charis]

I just made a challenge, haven't gotten the result yet.  Our current assess is probably higher than we could get for it, so I am fighting each increase as it comes.  The comparables they picked are nothing close to what we have going on, but we might lose the challenge and I'm ok with that.

[Urchina]

I challenged the assessment on our primary residence four years ago. The market had not recovered in our area and our condo was assessed at about $100k above market value.

I found several comps (on Zillow, recently sold) and filled out the form. In our area there is a 45-day window yearly when you can challenge assessments, so I made sure I got it in a couple of weeks before the deadline to give me some buffer if I got something wrong.

I won our challenge, they re-assessed, and it saved us $1250 a year in property taxes, for about 3 hours of work. That's a tax-free hourly wage of about $420. Totally worth it.

I won my challenge. One key takeaway. Be really nice when you do it.  Apparently a lot of folks treat them like garbage, and based on anecdotal evidence my challenge went through rather quickly because I was not a jerk.

+1. There is no downside to being positive, gracious, and polite. None at all. You do not have to be happy to be any of these things. 

I work as a local regulator for our county government, and I can say that I help everyone in as timely and efficient a manner as I can manage given my workload. However, when I have the opportunity to expedite service for someone, I am far more likely to do it for a person who is polite, kind, and good-natured.

[Drifterrider]

Anyone challenge a real estate assessment?  Ours went up significantly, and therefore increasing our mortgage payment by $120 a month.

Has anyone challenged their assessment? Worth doing? Things to look out for?

If by "assessment" you mean property taxes, I did and I won.

Bought a house in December 2008.  January 2009 property was reassessed for taxes.  Value went up $30,000.  I appealed and used my closing documents as proof of market value.  I won.

Property was corrected to the value I paid.

[going2ER]

I won my challenge. In the end they increased my assessed amount by $1k, not the original $46k. 

One key takeaway. Be really nice when you do it.  Apparently a lot of folks treat them like garbage, and based on anecdotal evidence my challenge went through rather quickly because I was not a jerk.

That is a significant difference in assessment amounts! I am fortunate to have bought an older house in an older neighbourhood, our tax rates are capped. Does anyone else have capped tax rates?

[Mr. Green]

What the assessments are based on also depends on the location. I see a lot of folks talking about comparable sales. One of the counties we have properties in flat tells you that sales mean nothing. You have to find other comparable property tax valuations to make a case for lowering your own. YMMV.

[Mtngrl]

I challenged twice on two different properties -- one in Texas, one in Colorado. Won the challenge both times, and both times the process was fairly simple - filled out a form, presented my evidence. In one case the evidence was that comparable homes around me were appraised at much less (easy to find out by going online and looking at the assessed values of my neighbor's homes.) In the second case, we had just refinanced and had the professional appraisal that was less that two months old. It didn't cost me anything but a little time to challenge, so I felt it was well worth it to try.

[KarefulKactus15]

I challenged mine and won.     They appraised me roughly 40% over value using blanket zip code values. 

I went to the court house, filled out the form and turned in a copy of the comparable properties I had from the mortgage closing.  The challenge form had a space for what I thought was a fair value, so I filled in what I honestly believed I could sell the house for. 


In the end, they called me back like 3 days later and said they would settle for the amount I wrote down and that I didnt even need to come back before the magistrate. 

[RedmondStash]

So -- the flip side of this question -- does anyone have a house whose official valuation is significantly lower than what they think they could sell it for? We get an annual postcard telling us what the land and buildings are appraised for, and the total is 5 figures less than what comps sell for now, and what Zillow thinks. This has been true for pretty much the entire 20 years we've been in this house.

If there are percentage caps to how much they can raise the official property value each year, that might explain it, because the house has increased in value significantly in 20 years, but it's always been puzzling.

[smalllife]

@redmondstache

Our tax assessment is lower than reality because we bought a fixer upper. The tax assessment goes off of purchase price and a yearly % increase. Did you initially purchase below value? Otherwise, unless your city goes around and physically asseses buildings I think you are just on the right end of the calculations.

[BTDretire]

Anyone challenge a real estate assessment?  Ours went up significantly, and therefore increasing our mortgage payment by $120 a month.

Has anyone challenged their assessment? Worth doing? Things to look out for?

 Sure, But you need to have data to prove your case.
I have challenged successfully, but I had great data. I bought the house for
way less the than accessed value. I just showed what I paid and the city dropped
the value immediately. Off the top of my head, I think the accessed value was $72k and I paid $47K.
  You need to find comparable properties with lower assessments and provide them to the  assessor. This a lot easier now, with the internet.  Good Luck.

[charis]

I recently lost my assessment challenge.  I provided an appraisal from 17 months prior and they did not find it recent/compelling enough to lower the assessment, which was based on recent home sales in our neighborhood for prices we could never get for our house (we would need to completely remodel the kitchen to get there).

[RedmondStash]

@redmondstache

Our tax assessment is lower than reality because we bought a fixer upper. The tax assessment goes off of purchase price and a yearly % increase. Did you initially purchase below value? Otherwise, unless your city goes around and physically asseses buildings I think you are just on the right end of the calculations.

We bought right about at value, 20 years ago. It was a pretty hot market, actually, so I'm pretty sure we paid market rate.

It's nice to be on the right end of the calculations. :) Just a little confusing.

[nancyjnelson]

A few years back I challenged mine and won.  What made this possible was that the majority of the houses in our neighborhood were originally identical with various modifications made over the years by subsequent owners.  It was difficult, therefore, for the county's Real Estate Assessor to argue (although he tried) that my house was worth 35% more than the formerly-identical house 100 yards down the street which had had a three-room addition built on to it.  The county ruled in my favor. 

The RE Assessment office was overhauled and by the next year the assessment were much less capricious.