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Author Topic: Challenging your property assessment  (Read 9783 times)
history_grrrl
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« on: November 19, 2012, 11:42:24 PM »

I really, really, really do not want to spend time on this. But I think I might have to. Here's the story, in brief. I'm going to use actual numbers because it'll be too complicated if I make things up. (Reminder: this is all in Canadian dollars)

* I bought my house in early 2009, a sweet little three-bedroom (one room is small and serves as my study), two-story built in the 1920s. It's across from a small park. It was a bank sale, listed at about $136,000. The place needed a lot of work, so my realtor talked them down to $122,000. I had to replace the wiring, the pipes, and the ("newer," according to the listing -- hah) furnace. That all had to happen quickly; I couldn't get the mortgage or homeowner's insurance without new wiring and pipes. Later on, I replaced the windows and got the place insulated; that first winter was hell.

* Sometime in 2010, I got a notice from the property assessment people. They said my house was assessed at $157,000 as of January 2008 (a year before I bought it). That seemed awfully high, and I thought I might contest it. I started the ball rolling by requesting data on comparable properties. Got no response, so a few months later I asked again. Followed up nearly a month later, and finally got the data -- a week after the deadline for contesting. Since I was recovering from major surgery by that point, I decided I could live with it.

* Later that year, I got a questionnaire from these people about my house purchase. I completed it accurately and sent it in.

* The other day, I got another notice of assessment, which carries me up to 2012 (they calculate how much your assessment has gone up and then phase it in over the next four years). Lo and behold, my property assessment for January 2008 has magically jumped to $166,000! And this is now being used as the base rate to bring my assessment up to $188,000 as of January 2012.

So, I thought: how on earth did the 2008 assessment -- in other words, the assessment from before I bought the house -- jump by $9,000? I called the assessment people, and got a guy who explained that 1) the increase likely reflected the improvements I had reported, and 2) I was supposedly notified of this change in 2011, and it is now too late to contest the change (unless I request and am granted an extension). I never received that notice; the $9,000 increase is complete news to me.

So here's the thing: If I add the list price of my house to what I spent to make it livable, I would say my house, right now, would certainly be worth $166,000. But to claim that this was its value before I bought it makes no sense. To me, this should partly explain the increase in assessment in the years after I bought the house -- but it should not be used to establish a new baseline from before I bought the house. I adore my house, but the idea that I could get $188,000 for it right now is absurd.

But the truth is, I don't understand the process well enough to even know if this is the problem I think it is.

So: has anyone ever dealt with this? Does anybody know anything about it? I feel like I need to consult with somebody -- but who? A realtor? A lawyer of some kind? Any advice is much appreciated.
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offthemarket
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« Reply #1 on: November 20, 2012, 1:01:33 AM »

I imagine, if taxes are the issue, then you've got to lawyer up.

I don't know how this works in Canada, but down in the US appraisals are mostly based on square footage of the property and the structures, and the overall condition of the property in coarse terms (very nice and newly remodeled, pretty good, okay, or shabby and needing repair), all adjusted to sales prices of houses in the neighborhood. So, look at the comps. What are neighboring properties selling for, and what were they back then? If you got a great deal when you bought it because of poor condition for invisible things (like pipes, wiring and such), then the initially high assessment didn't take into account bad pipes and bad wiring because assessors don't look at that stuff.  They see if things are remodeled and they measure square footage.

At least, that's how it works down south.
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pedanterast
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« Reply #2 on: November 20, 2012, 8:10:07 AM »

I heard something once about a fox and a hen house so I don't think you want to get your comps from the very body whose assessment you are challenging.
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offthemarket
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« Reply #3 on: November 20, 2012, 1:05:44 PM »

Meanwhile, there are people all over who are working and worried because their assessments are too low. They want to refinance but they don't have any equity in the home and nobody will approve the new loans. So people are stuck with higher rates at a time when rates are insanely low. If my assessment came in a 30 thousand more than I thought it would, I'd be over the moon, as would any of my friends who have a loan more than 9 months old.
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hegemony
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« Reply #4 on: November 20, 2012, 1:18:33 PM »

There will be an established procedure for challenging your property assessement, because mistakes happen all the time -- it is an imperfect science, even apart from mistakes made along the way.  The procedure will be on a website somewhere.  Search around for a while and if you can't find it, call and persevere until someone tells you where it is.  There will be deadlines that mean that you can't challenge previous years' property taxes or assessment after a certain point, but you will still be able to challenge future years'.
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flyingbison
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« Reply #5 on: November 20, 2012, 1:23:15 PM »

I got our assessment lowered (but only by about $10K) after buying our current house a few years ago.  As mentioned above, there is usually an established process in place for this.

Keep in mind, though, that the municipal assessment for tax purposes is different than an appraisal of market value. 
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karmann
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« Reply #6 on: November 20, 2012, 1:57:12 PM »

Where I live (in the US, in a major metro area with a serious housing crash), there are tons of lawyers who specialize in assessment appeals, usually for a cut (I want to say 1/3) of your first year's savings.  Now, our market is still nosediving, so the county is conveniently NOT reassessing unless someone appeals their assessment (I'm pretty sure if home values were rising, they wouldn't hesitate to reassess every year) so tax appeals are very common and pretty straightforward here.  I did mine without a lawyer.  My house was assessed in 2009 for $220k, and we bought it in 2010 for $160k.  All I had to do was appeal it (in person, after submitting a series of forms with separate deadlines) with the contract from our purchase and some tax documents relating to the sale, which established the fair market value at $160k.  It was sort of a hassle, but it saved me $1800 the first year and at least as much last year. 

Your situation sounds similar, but more complicated.  Remember, it is in their best interest for you to give up.  I have colleagues who have never appealed their taxes and are probably still being taxed at pre-crash levels, but they tell me they just don't want the hassle of an appeal.  That's what the county is hoping for.  I hate to be so adversarial about an interaction, but that was my experience.
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drjennycrisp
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« Reply #7 on: November 20, 2012, 9:48:26 PM »

Also the US here, but I appealed ours successfully just after we bought the place. I made the most progress when I went in to the office and talked to a person, then filled out the paperwork on the spot and handed it to her. Perhaps it was harder to be unreasonable while looking me in the eye?

Given that your area office has already "lost" some paperwork, though, it may be time for a lawyer.
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ursula
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« Reply #8 on: November 20, 2012, 11:26:14 PM »

I'm convinced that those municipal assessment numbers have little to do with reality.  Ours came the other day as well.  Apparently, for tax purposes, our house is worth $98K more than we paid for it.
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"Love is better than anger.  Hope is better than fear.  Optimism is better than despair."
Jack Layton, 1950-2011
pedanterast
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« Reply #9 on: November 21, 2012, 3:37:00 AM »

Meanwhile, there are people all over who are working and worried because their assessments are too low. They want to refinance but they don't have any equity in the home and nobody will approve the new loans. So people are stuck with higher rates at a time when rates are insanely low. If my assessment came in a 30 thousand more than I thought it would, I'd be over the moon, as would any of my friends who have a loan more than 9 months old.

You are confusing an assessment, done by a governmental taxing authority, with an appraisal, done by a lender.  In some jurisdictions the assessed value is supposed to approximate the fair market value but in other jurisdictions it combines with a mill levy to set the actual property tax and won't necessarily be anywhere near the fair market value.  OTOH the appraisal is always an attempt to set an approximate market value. 
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clean
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« Reply #10 on: November 21, 2012, 1:44:00 PM »

There is an appraisal technique called "mass appraisal".  That is what municipalities use to  assess your house for taxes. Then the taxing authority sets the millage rate.  The mass appraisal would not adjust your house for substandard electrical, windows or plumbing. 

As was mentioned, there is a process to have your appraisal changed.  Advice from us may not be appropriate for you and your municipality. 

Here, they mail the notice in the Spring. There is a window to appeal the valuation.  In October they mail you the actual tax bill. 

My own 'fight' was that the city listed a generic blueprint of what they thought my house looked like.  They thought that I had a fireplace and a bigger slab.  I challenged those assumptions and 2 things happened.  First they did lower my house valuation by <1000 and then they removed the generic blueprints from the website! 

Find the process, follow it, and good luck.
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"The Emperor is not as forgiving as I am"  Darth Vader
libwitch
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« Reply #11 on: November 29, 2012, 12:24:12 PM »

pedanterast hit it on the head - the house was sold to you at a market value, which is not (often) the same thing as the property assessed value.  In a perfect world, they might be, but they simply aren't.

Market value is based on consumer value of the house and has a lot of variance; property assessed value is usually to try to determine what the value of the house is - compared to other similar houses.
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history_grrrl
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« Reply #12 on: September 21, 2013, 12:14:55 AM »

Update: I won! Assessment has been lowered by $29,000!

It took a lot of time and effort to put the supporting documentation together, but the process convinced me that there's a lot of randomness in the assessment process. I'm guessing someone looked at the paperwork and decided I was too tenacious to bother challenging.

Thanks for the useful advice, all!
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clean
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« Reply #13 on: September 21, 2013, 1:41:04 AM »

Good for you!
Congrats!
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"The Emperor is not as forgiving as I am"  Darth Vader
mythbuster
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« Reply #14 on: September 22, 2013, 12:15:38 PM »

Great news! We had to to contest the assessment on our house in Postdocville. In PDville, they only reassess once a decade, and then the entire county in that one year. So it was chaos. They over assessed us by $50k, the year after we purchased. Turned out they thought we had an extra bedroom and bathroom. The records on the basic stats of the house were totally wrong, and we're not based on real estate listing info, or formal plans of the house, but rather a satellite photo and a drive by assessment! So I urge everyone to look very closely  at the stats on their house!
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