How to Lower your Property Taxes (Part 4)

by The Real Estate Faction on September 12, 2011

How to Appeal

The key to a successful appeal of your property value, experts say, is comparable sales, or “comps.”

In many states, the appeal process is like a less-formal court hearing, where property owners present their case to several local officials or representatives. The simplest way to convince officials that your property has been incorrectly valued is to provide evidence of the sales price of homes that are comparable to yours, in terms of square footage, amenities and neighborhood characteristics. Bring sale documents and photos of your property, as well as the comps.

The websites of many assessors’ offices include recent property sales, or you can check sales prices in your newspaper or with a local real-estate broker. Experts caution homeowners not to rely on home-value data from Zillow Inc. or other online real-estate information and search firms, since their figures aren’t official and are unlikely to stand up as evidence in an appeal.

For purposes of comparison, you should consider only “arm’s length” sales, meaning a sale between two parties who don’t know each other. A sale between two people who do know each other could result in a lower price and is unlikely to be accepted in an appeal. Check for the same last name on sales documents as a clue that a sale isn’t arm’s length.

The appeal board also might question a home that sells quickly in a bad market, which could indicate an owner who needed to sell in a hurry. That means that sale might not work as a comp. Some property-assessment advisers say you can even use foreclosed homes, if those are the only sales in your area.

Assessors choose a specific date when measuring a home’s value, which might be several months before you receive your assessment notice. If your assessor set values on Oct. 1, 2010, and you are looking at home sales in June and July 2011, an appeal board is likely to reject those comps.

The weak housing market means there aren’t as many people selling their homes, making it difficult in some places to find comparable sales.

If that happens, you might consider hiring a professional appraiser to value your home. The average appraisal ranges from $350 to $600 for a typical single-family home, according to the Appraisal Institute, a professional association. Appraisers typically charge by the hour to appear at an appeal hearing. (To find an appraiser, go to www.appraisalinstitute.org and search by ZIP Code.)

Another option is to hire a lawyer who specializes in property-tax appeals. That is what Al Hollander did when he bought a house in Springfield Township, N.J., and realized that he was paying higher taxes than a nearby house that sold for about $35,000 more.

Mr. Hollander bought his home for $465,000 in May 2010. It is on 1½ acres and has five bedrooms and 3½ baths. But a nearby house, which sold for about $500,000 in the summer of 2009 and is on 2.2 acres with a swimming pool, paid $1,200 less in 2009 property taxes, he says.

Mr. Hollander, a physician’s assistant, hired a friend who is a property-tax lawyer to lower his assessment. “What do I know about property taxes? I go to an expert,” the 42-year-old Mr. Hollander says.

The lawyer helped Mr. Hollander lower his assessment from $605,000 to $550,000 for 2011 through an informal hearing with the assessor’s office. The cut reduced his 2011 property taxes to $12,000 from $13,100 in 2010. For 2012, his assessment decreased to $500,000, meaning additional tax savings of $1,100. Springfield Township officials were unable to be reached for comment.

Property-tax lawyers often work on contingency and charge 30% to 50% of the tax savings for each year, says John Brusniak, president of the National Association of Property Tax Attorneys, a professional group. Those fees can differ by locality, he says.

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