Letter to the Editor: The appeal process only works for people who can afford to pay people like me
As a State-Certified Residential Appraiser, I am sure you can imagine the calls I have received since the new property valuation numbers came out. I have spoken with both elected representatives from the City and County about how far off many values are, and they say it is okay because they will make the total monies taken in "revenue neutral." However, none of them seem to understand that it cannot be fair for everyone when most valuations are so far off from true market value.
The completed revaluation process used ensures that most values are wrong. My definition of "wrong" is more than five percent off from fair market value. I have looked at tax cards for people and only one home value appears to be within an acceptable percentage range of fair market value. About 80 percent are high, and 20 percent are low. I have seen some properties valued at more than double their proper value and some 75 percent too low.
I am not sure if you have looked into how the values are calculated, but the process that our Tax Department—and the company hired to help—used assures they will be using very limited and unverified data. First, according to my conversation with our Tax Department personnel, they have no access and do not plan to use the local Multiple Listing Service appraisers rely on every day. I was told they would only use deed transfers and rely on deed stamps for sales prices. This is an antiquated method and is not used, even as a backup method, by any professional appraiser without contacting the buyer and/or seller to validate the sale, sales price, and any concessions.
I was informed that the new policy would not include any effort to validate the sales they use for the revaluation. I have never heard of a Tax Department not sending out letters to try and validate sales transfer information. My experience indicates that about 90 percent of deeds have inaccurate stamps or have no deed stamps at all. No MLS and no verified transfers will produce very limited sales data, none of which could remotely be considered reliable. This is a surefire way to get bad results.
Additionally, the cost figures and cost approaches typically used are completely unreliable unless you are valuing a home built in the past five years. Even then, the values reached using the cost approach many times have little relation to the price homes are selling for. They will tell you, as I am sure a response to this letter is coming, that the valuation methods they are using are state-approved. They are exactly right. These methods are used all over the state, which is why last year I received tax appeal work in Pitt County and just this week started getting calls from New Hanover County.
Using only the state-approved valuation methods, in my experience, assures you will get inaccurate values—both high and low. Proper examination of verified comparable sales has to be completed to build a database. This database of verified sales allows for the calculation of supportable adjustments for factors like location, acreage, quality of construction, condition, car storage, detached buildings, age, etc. Even then, you have to have people with the experience to properly know when and how much to adjust for these factors.
The one good thing that was done this time was we paid to have each property visited to look for obvious differences between what was on the tax card and what was actually on the subject site. This had not been done in years and was needed to fix errors. Unfortunately, I watched the people hired to go out and look at the properties for one hour over by Teachers Memorial School and about 30 minutes on Towerhill Road by Sampson School. Except for a few minutes, they stood around their vehicles talking. During those few minutes, they walked down the road less than 30 yards from the vehicles and looked at one house. Now, maybe it was break time, but I did not see much work being done. I have no idea what they did; I’m just telling you what I saw.
My point in writing this is that “revenue neutral” is a fine term if your only concern is making sure the bottom line the City and County receive in tax revenue is the same as before. However, no matter what they do to the tax rates using these valuations, some people are going to be paying too much and some are going to be paying too little. The only way everyone pays their fair share is for the valuations to be accurate.
I keep hearing that if your value is wrong, just appeal. The appeal process only works for people who can afford to pay people like me, and even then, it is not a guarantee. How many people even know they can appeal? And how many of those would know how to do it properly? How would they even know their value is wrong?
This is an important point: the company hired, nor our Tax Department, is required to make value changes even if they have been given an appraisal produced by a North Carolina Certified Appraiser. So people without any training remotely close to my experience, local knowledge, and 30-plus years of expertise, can simply say they are not making a change.
Wrong values have other consequences, not just what property owners pay the City or County. Right now, people all over the County are getting letters from their mortgage companies and insurance carriers who have seen the new values. Anyone with a mortgage is seeing their payment go up to cover next year's taxes. Insurance premiums are going up as the insurance companies believe, in most cases falsely, that homes are now underinsured. If your property value doubles, so will your insurance premium.
So what is the solution?
How about actually hiring a North Carolina-certified appraiser to work full-time at the Tax Office? This way, instead of having to play catch-up every seven years—which causes the giant valuation swings we are seeing—values can be adjusted every year or two, by a professional, using available methods to ensure the valuation adjustments are accurate and supportable, and the sales data used has been verified.
Also, based on what I have learned regarding the money spent to get these results, paying a certified appraiser, say $95K a year, the County would save at least 50 percent. We had a certified appraiser on staff some years ago and we did not have these problems.
I do not know what is going to happen—maybe nothing—but this talk of "revenue neutral" has to start including “after we get the values right.” You should not have to be wealthy and knowledgeable about real estate valuations to ensure your property value is accurate.
Some of the worst valuations I have seen are in the poorer neighborhoods, which admittedly are the hardest to properly value. Increases in property tax and insurance premiums affect these property owners the worst, as many already struggle to make ends meet.
We have some great people working in our City and County government offices. They are not to blame for this problem. Our elected officials have to require our Tax Department to do better. I think we have learned this year that many parts of our entire governmental system are broken and need attention.
Let us start here.
Anthony Kennedy
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