Understanding how it works to appeal property taxes

When the market gets hot, people tend to forget about their property taxes. Even the Sacramento County Assessor shows there were 35% less appeals filed last year compared to previous years (see graph below). We all know the market increased rapidly in recent time, but some people frankly still should have appealed, but they didn’t. Here is how the appeals process works and some tips to consider for this year.

Real Estate Agents & Loan Officers: Knowing these tips makes you well informed and an enormous asset for your clients (download a larger image to use in your newsletter). I hope this helps.

flow chart for appealing property taxes - by sacramento appraisal blog - white 530 - 2

10 quick things to know about appealing property taxes

  1. The Date: Your assessed value is based on January 1 of the given year – NOT today’s value.
  2. 2004-2007: If you purchased from 2004-2007 in particular, be sure to pay attention to your property taxes this year since the market is not quite back to those price levels yet in many cases.
  3. Wait Until July: Wait to see how the Assessor assesses your property before deciding to appeal. New assessments should be out in very early July. Do NOT hire anyone (including me) to help you appeal before you know what your assessed value is.
  4. Your Wallet: Remember that ever $10,000 in assessment is about $125 out of your pocket. This is a good gauge to keep in mind to help you decide whether it is worth it to appeal or not.
  5. Deadlines: You can begin appealing in early July, but the deadline to dispute property taxes in Sacramento County is usually November 30 (sometimes December 2). The deadline to appeal property taxes in Placer County is usually mid-September (dates will be announced by July).
  6. Two Form Options: There are 2 forms you can fill out. The Prop 8 “Decline in Value” form is a free informal review and the Application for Changed Assessment is $30 and is an actual appeal. Knowing the difference can make a huge impact for you and your clients because sometimes people think they appealed, but they actually only filled out the free form. Here is a brief video explaining the differences between these two forms.
  7. My Recommendation: In this market I recommend filling out the free Prop 8 “Decline in Value” form first, but if you don’t hear back by October in Sacramento County or August in Placer County, file a formal appeal. The Prop 8 form has no weight or power to take your appeal further once the appeals deadline has passed. In other words, if the Assessor disagrees with your value on the free form, you cannot move the conversation forward or have the right to an appeals hearing once the deadline to appeal has passed (since you did not actually file a formal appeal).
  8. Lowball: Don’t lowball your value.
  9. Comps Near January: Support your value with sales close to January 1 of the given year. Make sure your “comps” really are comparable. Don’t just use the lowest sales in the neighborhood. Use whatever is comparable.
  10. What Happens After You Appeal: The Assessment Appeals Board will either agree with your value, propose a new value that you can either accept or reject, or call for an appeals hearing. Try to resolve your appeal before the hearing. Otherwise bring your support to the hearing and argue your case. Resolving your appeal prior to the hearing can happen over the phone with whatever appraiser is assigned to your case. This is where knowing the market and all comps really well comes in very handy.

By the way, this graph shows the number of appeals filed last year after the market really heated up. What will happen this year?

graph of assessment appeals filed

flow chart for appealing property taxes - by sacramento appraisal blog - white 2A Resource for Your Blog & Newsletter: For my real estate friends, let your clients know about the tips above by forwarding this post. Or you can use my property tax flow image on your blog, Facebook or in your newsletter (just link back to me). Here is a larger-sized image too in case it’s relevant. Just click on the thumbnail and save to your desktop.

My Services: I’ve done quite a bit of work with “decline in value” property tax situations, but also with escape assessments and other base-year value challenges. I don’t use a full appraisal because it’s really not needed in most cases. Instead I developed a more limited custom valuation product that is amply informative, yet it costs less than a full appraisal.

Questions: Any other tips? Why do you think there were less appeals filed last year? Have you ever disputed your property taxes and found success?

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What you need to know about the property tax appeal deadline NEXT week in Sacramento

I’m not trying to be THAT guy by starting a business conversation during Thanksgiving, but this is important. Did you know the deadline to appeal property taxes in Sacramento County is on Monday? Since December 2, 2013 is the cutoff point, I’ve boiled down the process to three steps of what you need to know. Please pass this along to friends and clients.

Image-purchased-by-Sacramento-Appraisal-Blog-and-used-with-permission

Three Steps for Disputing Property Taxes in Sacramento County:

  1. Look up your assessed value here: Your assessed value listed at this link is supposed to be what your home was worth on January 1, 2013 (NOT today’s value). Does the value seem reasonable? If yes, don’t do anything. If not, go to Step 2. Keep in mind every $10,000 of assessment ends up costing you about $125 out of your pocket. This means if you are overassessed by $50,000, you’ll be overpaying about $625 this year in property taxes. This is good to consider so you can determine if it is worth your time and effort to move forward.
  2. Request a free informal review by the Assessor here: You can ask the Assessor to take a look at your assessed value for free. This is not an appeal, but only an informal review (also known as a “Prop 8 Decline in Value” form). If the Assessor responds to you at some point, great. But if they don’t agree with your opinion of value after the deadline to appeal has passed (even if you are right), you’re out luck since you didn’t formally appeal (Step 3). This step is better than nothing (and it’s free), but Step 3 is best.
  3. Image purchased at 123rf dot com and used with permission - 14688774_s - smallerFile a formal appeal: All you need to do is fill out the Application for Changed Assessment (PDF) (cost is $30) and turn it in before the deadline. Along with the application it’s best to provide some support for what your property was worth on January 1, 2013. Ideally you should provide a list of comparable sales around January 1, 2013 (NOT current sales) and write up a few sentences about how these sales compare to your property. Let’s be honest though, it is a busy week ahead, so if you don’t have time or ability to gather support in these next few days, just fill out the application anyway. The most important thing this late in the game is to get the application in. You can always provide support later (or hire someone like me to help you with that in the future if the Assessor sends you a letter about an appeals hearing). The main benefit of a formal appeal is that it entitles you to carry on the conversation with the Assessor if they disagree with your opinion of value. You do not have the right or power to keep the appeals conversation going when you only do Step 2.

Please let me know if you have any questions. I really understand how this process works, so I’ll be glad to answer any last-minute questions you might have.

Have a wonderful Thanksgiving. I hope it’s your best one ever.

Pro Tip: Don’t talk about property taxes at the Thanksgiving table.  🙂

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What is the difference between “assessed” value and “appraised” value?

Why is there often a huge difference between what the Assessor says your property is worth and what an appraiser says maybe during a purchase or refinance? Let’s take a look below a some of the main distinctions and then consider a real life example of a property owner who has overpaid about $8,000 in property taxes in recent years because his assessment was simply too high. Ouch.

Assessor vs Appraiser - by Sacramento Appraisal Blog

Assessor vs. Appraiser: An Assessor in California is required to have a certified appraiser’s license, but that doesn’t mean the value will be same as an appraiser coming out to your house during a refinance, purchase or other situation. Ultimately there is a huge value difference at times because the Assessor is establishing value for taxation purposes (and is bound by the protocols of tax code) and an independent fee appraiser is likely measuring the current market and is not doing anything related to taxation.

Assessed value vs Market Value of a 4-plex - by Sacramento Appraisal Blog

Overpaid $8,000 in Property Taxes: This case above is a striking example of one of the unfortunate byproducts of a mass appraisal process by the Assessor. This property owner’s assessment on his fourplex in Sacramento was accurate for a couple of years after purchasing around $300,000 in 2003, but as values tanked in the neighborhood, the assessed value simply remained too high above all other competitive sales. The sad result for the property owner has been about $8,000 in overpayment through the years. Unfortunately the owner cannot go back to dispute the previous years of assessment, but at least this year he is going to appeal his property taxes to hopefully bring the assessed value down from $325,000 to around $200,000 where it should be.

Any thoughts, questions or stories to share?

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Client gets $220,000 reduction in assessed value

I got some great news recently for a client, so I wanted to share the bliss. This client hired me to help him get his property taxes in sync with the current market since his home in Carmichael was overassessed by over $200,000 (ouch). After I turned in my tax appeal report to the Assessment Appeals Board in Sacramento County, his assessed value was lowered by $222,574. This means he’ll be getting a $2,300+ refund check in the mail. Cha-ching.

lowered property taxes for a client - by sacramento tax appeals

There is so much confusion and dishonest information out there about the property tax appeals process. If you have any questions, you may want to read 5 Things to Know about 2013 Property Taxes (or watch the video below). Then be sure to look up your 2013 assessment on the Assessor’s website.

Question: What would you do with a $2,300 refund check? Comment below.

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