Maricopa county tax appraisal

[rzyzzy]

My little bro bought a place in Phoenix last year, the tax appraisal is for 2010 is $92k and his purchase price was $65k, with the bank kicking back $3k for closing costs. A couple of other properties in the same subdivision went for similar pricing, a model-match with a new kitchen for $65k in December 2008, and a bigger 3-2 went for $66k in March 09, so it isn't like he got a sweetheart deal or anything. The home was on MLS for 118 days at $79k,starting in February - and we assume all the local specuvestors with borrowed money had a peek at it, since the realtor business cards were 2 inches deep on the kitchen counter.

The FHA appraisal was $65k in June 09, and that was after we had corrected several defects that would have made the property unsuitable for FHA financing (leaky flat roof over the garage with moldy drywall hanging down, bare wires sticking out where the range hood, dryer outlet and smoke detector were stolen, missing doors and drawers in the kitchen and bath cabinets, broken window in living room, etc). - as it was offered by the bank, it could only have sold for cash, they would do NO repairs. I suspect the actual cash value to an investor-flipper would have been $50-something, since it's a 2 bed-1 bath. The lender's appraisal also indicated the SQ ft is incorrect at the tax office, 768 actual, versus 912 tax office.

Even though we aren't dealing with a huge sum of dollars, that tax bill never goes away, so an investment of a few hundred dollars to get a real appraisal - and hire an attorney, if necessary, to get the assessment corrected - seems like money well spent, even if it does only pay back at $20-$30 a month in reduced taxes, to my bro, that is real money.

FWIW, this isn't a rental or a flip, this was his way out of an overpriced 1 bedroom apartment with really noisy neighbors, $50 a month in "pet rent" , and getting his car looted at random because it was parked in a rental complex.

Does anybody here do appraisals for tax-valuation purposes? I'm assuming we would need a "retrospective" appraisal, since the effective date needs to be some point in the past, I'm assuming January 1, 2009?

From what little I've been able to glean online, it appears 80%+ of appeals are denied at the county level, so to have a real chance at fairness we'll need to be prepared to go to the state appeal and have all our ducks in a row. We'd much rather be over-prepared and over-documented than waste time and get ignored.

Thanks in advance for any help or advice.

 

[Jo Ann Meyer Stratton]

Due to Arizona laws the valuations used for assessment purposes are two years behind the market. Values established for the 2010 tax year (tax bills will be sent out in September 2010) will be based on the market activity in 2008. Assessed values based on the market of 2009 will not be reflected until the 2011 tax bills. You can go to the Maricopa County Assessor's web site is see the values for each tax year for each parcel. To determine if the value for your brother's property is equitable or not compare it to other very similar properties in the immediate area of the subject. For example if all 1,200 square foot homes originally constructed in 1985 in the subject subdivision are valued at $91,248 then that is equitable and doesn't matter if they sold for $175,000 in 2007 and $65,000 in 2009. If all the sales of similar homes sell in 2009 for around $65,000, then the assessed value in 2011 should be between $60,000 to $70,000.

Taxes and assessed values are like a see saw. The schools, which are usually about 80% of the tax bill, might require $100,000 for example to operate for the year. So one hundred tax payers have to each pay $1,000 in taxes for that year. It won't matter if their assessed value is $50,000 or $100,000--the final tax bill will be $1,000 each. The big question is are they all valued at $50,000 or are only a few valued at $100,000 and the rest at $40,000. In that case the ones at $100,000 have a complaint.

So compare the value of your brother's property to the values of other similar properties in his neighborhood. If they are comparable, he won't have much luck protesting his value, regardless of current market value. You should be able to get that information from the assessor's web site.

 

[Sheikh Yerbouti]

What Jo Ann said.

 

[The Sheriff]

Thanks Jo Ann for the education... Learning something new everyday...

 

[rzyzzy]

Due to Arizona laws the valuations used for assessment purposes are two years behind the market. Values established for the 2010 tax year (tax bills will be sent out in September 2010) will be based on the market activity in 2008. Assessed values based on the market of 2009 will not be reflected until the 2011 tax bills. You can go to the Maricopa County Assessor's web site is see the values for each tax year for each parcel. To determine if the value for your brother's property is equitable or not compare it to other very similar properties in the immediate area of the subject. For example if all 1,200 square foot homes originally constructed in 1985 in the subject subdivision are valued at $91,248 then that is equitable and doesn't matter if they sold for $175,000 in 2007 and $65,000 in 2009. If all the sales of similar homes sell in 2009 for around $65,000, then the assessed value in 2011 should be between $60,000 to $70,000.

Taxes and assessed values are like a see saw. The schools, which are usually about 80% of the tax bill, might require $100,000 for example to operate for the year. So one hundred tax payers have to each pay $1,000 in taxes for that year. It won't matter if their assessed value is $50,000 or $100,000--the final tax bill will be $1,000 each. The big question is are they all valued at $50,000 or are only a few valued at $100,000 and the rest at $40,000. In that case the ones at $100,000 have a complaint.

I'm a little confused at with your posting - from the assessor's website I pulled a 2010 "tentative" valuation for his home of $92k. I'm assuming that's the notice he'll get in the mail in a month or so, and from what I understand, that's the only value he can contest. He paid substantially less than that in July 2009, and there are several "comps" in his exact subdivision that sold for under $70k from December of 2008, until currently, and many of them are larger 3-2's.

The fact that he'll be paying 2010 taxes in 2011 makes it even more important that he correct the situation now, he doesn't have the opportunity to appeal for prior years, although he really ought to get an immediate break, because the square footage is overstated on the tax rolls, making all of the assessor's "comps" incorrect.

 

[Jo Ann Meyer Stratton]

Arizona taxes are paid on a calendar basis. The tax bill that is due before November 1, 2010 is based on the status of the property on January 1, 2010. However, due to the mass assessment system, the value as of January 1, 2010 is based on market information as of January 1, 2009. It takes each county assessor a full calendar year to develop research and analysis of all the sales that occurred during the calendar year of 2008. And because of the massive amount of data that is accumulated, the value isn't going to be as precise as a fee appraisal. Also properties are typically only field checked every three to four years. People hate to pay taxes, so the county can't collect enough tax revenue to hire sufficient employees to handle field checking every property every year. And to help speed things up they use building permit information, aerial photos, etc quite frequently which is not as precise and measuring each property.

So the sales in the $65,000 range that sold during 2009 will not be analyzed until some time during 2010 for the 2011 tax roll. So there will be a very good possibility there will be further drops in the valuation for the 2011 tax bills.

You mention an error in square footage. How much of an error? A few feet or several hundred feet? Again because of the mass assessment system that could be for several reasons. Assessor's office has a building permit for an addition, they see an addition in an aerial photo, so they increase the livable area for that specific property. Or, as they drive down the street they see the carport is now enclosed so that square footage is added to the livable area. In both cases, maybe that additional square footage should have been valued as storage instead of livable area. In that situation you can file a protest based on factual data when you receive your notice of assessed value. After the office has field checked that situation then if it is storage instead of livable area the value would be adjusted for the 2010 tax bill and future years. If that area has interior finish (even if it isn't similar quality to the original home) that area will remain in the livable area. When the assessor's field appraisers are at a property they can only measure and note the exterior of the home, they can not go inside the home unless the home owner invites them in. And then there are the very angry owners who won't even let the assessor's field appraiser set foot on the property--so they have to rely on aerial photos and make guesstimates from the public street. Thirty five years ago when I was a field appraiser for an assessor's office, I had an angry tax payer spit in my face when he saw me walking toward his front door.

So my suggestion is to go to the assessor's office, get a copy of the sketch of the property. Compare that sketch to the improvements and see if there is any descrepancy. If it is several hundred feet off, then you can file a complaint, either verbally while in the office or formally. Have a sketch from your appraisal with you to give the assessor's office if there is a descrepancy. Look at the other properties similar to yours, note their square footage, age, and valuation. If the assessor's records are correct and all the similar homes are valued similar to yours--it would not do much good to protest--you just have to wait for the wheels of the process take place. If your value is drastically higher then the similar properties, file a formal complaint.

Fee appraising is valuing a specific property at a specific time (usually very current effective date). Ad Valoreum appraising is based on state laws as of a date in the past and involves hundreds to thousands of properties in one package. So only the basic information is gathered and then either a computerized cost approach or regression analysis or a hybrid of the two is applied. Assessment offices nationwide have been doing AVMs for forty years.

 

[rzyzzy]

You mention an error in square footage. How much of an error? A few feet or several hundred feet? Again because of the mass assessment system that could be for several reasons. Assessor's office has a building permit for an addition, they see an addition in an aerial photo, so they increase the livable area for that specific property. Or, as they drive down the street they see the carport is now enclosed so that square footage is added

140 square feet over on a 768 square foot house. No additions or improvements since 1985, just paint, carpet, and half-a-dozen refi's and helocs whenever the prior owner wanted a new car or a nice vacation - and no doubt the sq-ft error at the tax office helped the prior owner with those endeavors.

Again, this might be pretty small potatoes for most people, but we're over by at least $20k, and most likely closer to $30k on a $65k purchase. Percentage wise, it's significant - and for someone with his income, every dollar counts.

The property is forever impaired if he wants to sell it, since most realtors aren't even going to see it in an MLS search if they're looking for 3-2's - it's a 2-1. He's fully aware of that, and just wants to be taxed fairly. This isn't a case of someone who just "figgers" his house is worth less than the assessment, what he paid is recorded, and there are a couple others who bought for similar prices. Not sure how they can argue an avm is more accurate than actual sales in his neighborhood.

I'll get down to the assessor's office this week and ask about a sketch - perhaps I'll get lucky and they'll actually listen.

He filled out the "report an error" form on their website back in July, and they never responded or corrected his info - even though the website says errors are a "top priority".. haha...

 

[Jo Ann Meyer Stratton]

Yes, go to the assessor's office with a copy of the sketch from your appraisal and compare it to the sketch they have on file. That is the first step. Just for an exercise I took a look at a property my son is considerting buying in the Mesa area. The asking price is $84,900. The full cash value for 2010 is $118,000. But I am not suggesting to him to protest. The tax bill for 2009 was $939 which is in line with other similar properties, so there isn't any reason to protest. A difference in the tax bill between a $84,900 full cash value versus a $118,000 full cash value would be about $13 dollars a month provided the tax rate stayed the same. However the tax rate in 2011 very probably will be higher due to increase in school budgets and the drop in total assessed value for the school district, which means the tax rate would have to go up to finance the increase in the school budget and offset the decrease in values. So I bet the taxes in 2011 isn't much difference than it was in 2009, regardless of how low the full cash value decreases.

But you have to look at the actual sketch--the assessor's office and private reporting services lump all improvements together in their printouts. For example there might be a 700 square foot house, a 200 square foot carport, a 100 square foot storage shed. The assessor's office values each of those structures at a different level due to the difference in construction. However, a computerized report very likely will show 1,000 square feet of structures on the property because there is only one line for structures.

A complaint that was filed the summer of 2009 will not be reflected until the 2011 tax roll. So his complaint might have been processed but due to the scheculing of the tax year, it is not reflected in the assessed value yet.

Basically what I am saying is--gather the actual facts first and then understand how it all fits together in the puzzle that is the system.

 

[Billie Hiser]

Take it to tax court!

Yes, go to the assessor's office with a copy of the sketch from your appraisal and compare it to the sketch they have on file. That is the first step. Just for an exercise I took a look at a property my son is considerting buying in the Mesa area. The asking price is $84,900. The full cash value for 2010 is $118,000. But I am not suggesting to him to protest. The tax bill for 2009 was $939 which is in line with other similar properties, so there isn't any reason to protest. A difference in the tax bill between a $84,900 full cash value versus a $118,000 full cash value would be about $13 dollars a month provided the tax rate stayed the same. However the tax rate in 2011 very probably will be higher due to increase in school budgets and the drop in total assessed value for the school district, which means the tax rate would have to go up to finance the increase in the school budget and offset the decrease in values. So I bet the taxes in 2011 isn't much difference than it was in 2009, regardless of how low the full cash value decreases.

But you have to look at the actual sketch--the assessor's office and private reporting services lump all improvements together in their printouts. For example there might be a 700 square foot house, a 200 square foot carport, a 100 square foot storage shed. The assessor's office values each of those structures at a different level due to the difference in construction. However, a computerized report very likely will show 1,000 square feet of structures on the property because there is only one line for structures.

A complaint that was filed the summer of 2009 will not be reflected until the 2011 tax roll. So his complaint might have been processed but due to the scheculing of the tax year, it is not reflected in the assessed value yet.

Basically what I am saying is--gather the actual facts first and then understand how it all fits together in the puzzle that is the system.

Jo Ann, if your son buys the home and the purchase price is lower than the Full Cash Value, regardless of the assessment calender, you can take the case directly to tax court (bypassing the appeal process) because he is a new owner he can get the Full Cash Value lowered to the purchase price or lower depending on how your Assessor does his valuations.

Here in Mohave County, we're at about 73% of market value, so we argue 73% of sales price and thats where our Full Cash Value lands. We win 99.9% of our tax court cases and appeals at the county level. We usually come to an agreement with the Assessor before going to BOE.

My husband and I are Property Tax Agents as well as appraisers so the paperwork is pretty easy for us. I'm sure you could walk him through it and forms are online. There is a filing fee of $142 but considering the amount you save in current and future taxes its worth it.

 

[Billie Hiser]

Does anybody here do appraisals for tax-valuation purposes? I'm assuming we would need a "retrospective" appraisal, since the effective date needs to be some point in the past, I'm assuming January 1, 2009?

From what little I've been able to glean online, it appears 80%+ of appeals are denied at the county level, so to have a real chance at fairness we'll need to be prepared to go to the state appeal and have all our ducks in a row. We'd much rather be over-prepared and over-documented than waste time and get ignored.

Thanks in advance for any help or advice.

I'm not totally sure on Maricopa County's procedures, but what I would do is pull comps in the same book and map as your subject. You can win at the Assessor level appeal if you have good support for your argument. A sales price is an excellent argument. You can have an appraisal done, but really, as an agent you should be able to pull sufficient information to fill out the appeal form (which is available online on the Assessor's website) In fact, had he/you done this before December 15th you could've filed it in Tax Court and won. See my post to Jo Ann above.