To Appeal or Not Appeal
Posted by Chris Bradford on May 19, 2007
To Appeal or Not Appeal
Every year you get a statement from the county government telling you how much they feel your property is worth and, based on that, how much your property taxes are going to be. If you are like most property owners, you see your tax value creeping up each year, sometimes taking a huge leap.
After a while, you begin to feel the county has your property valued too high and think you might need to appeal the county’s valuation. This is when you discover what disadvantage property owners are really under.
Let’s assume that you feel your house is worth about $150,000 but the county says they feel it is worth $180,000. In most counties (but not all) in Georgia, your property taxes are based on 40% of the value, or in this case $72,000.
Assuming your county taxes you at 35 mils (the actual rate varies depending on the county, whether or not you are in the corporate limits of a city, and sometimes where you are within a county), your annual property taxes would be $2,520, unless you qualify for homestead exemption. If you live in your house you probably qualify for homestead exemption which would provide you with substantial savings.
If you were to be successful in getting the county’s valuation of your property reduced to $150,000 your tax burden would reduce to $2,100, a savings of $420. A relatively significant sum.
You decide to appeal your property taxes and file your appeal. In most cases there is not cost in filing an appeal to the equalization board. Between filing the appeal and the date of appeal you spend several hours researching your home’s value. You check real estate listings in your neighborhood, you call a friend who is a real estate professional and she prints you a list of recent sales in your neighborhood, you prepare the information in an attractive package and feel you are certain to win your case.
On the day of the appeal you walk into the room and notice several people sitting at a table. Usually, they are older citizens, typically retirees, who are appointed by the county commissioners. You introduce yourself and they ask you to take a seat.
The county appraiser arrives, we will call her Sarah. She and the board members seem like long-time friends. They ask about her husband, her children, and her latest ailment. She asks about their families and health. They briefly discuss a recent appeal or two and she sits down at a chair at the table.
You each present your respective cases. You explain what information you have, telling a little about each house that sold. You feel you did a great job in your presentation. Sarah presents her case, she has more data than you and some of the information she has does not match the information you have. It tuns out she has spoken with the buyer, seller or agent involved with each sale that she used. Regardless, the information is not significantly different, just your conclusions are. You feel you have a great chance.
The board members ask you a few questions, beginning with your experience in real estate and or real estate appraisal. They continue by asking you questions about your property and maybe a few questions about the information you presented. Sarah is asked fewer questions than you and the questions seem to be more directed to help convince you Sarah is right. You leave the board uncertain what will happen.
A few days later you receive a notice that they appeals board ruled in favor of the county. You are certain you are right and have the opportunity to appeal the case to state court, but feel it is not worth the expense of getting an attorney involved, so you drop it and feeling cheated, pay the higher taxes.
What went wrong? Everything.
Property tax payers are at a distinct disadvantage when appealing their property taxes. Let’s discuss just a few:
Equalization Boards are Appointed by the County Commissioners:
The equalization boards are supposed to be impartial, yet they serve at the pleasure of the county commissioners. Should the commissions receive enough complaints from the tax office that a particular board or board member goes against the county appraisers too often, the commissioners will make a change. After all, it is for the public good.
A better solution would be to have seats on the equalization board be elected positions with the board members serving at the pleasure of the voters. If this were the case, they would be more responsive to the community.
County Appraisers and Equalization Board Members Build Relationships:
The county appraisers appear before the board members day after day, week after week, month after month, year after year. They can not help but to develop some form of relationship. In the best case, to the equalization board members the county appraisers are a friendly face, while you are a complete stranger. It is human nature to trust someone you are familiar with more than you trust a complete stranger. Don’t we teach our children not to even talk to strangers? We are coached from our earliest years not to trust those we do not know. This does not change with age.
In the end you have to work twice as hard and be twice as convincing to overcome the relationship which has developed between the county appraisers and members of the equalization board.
The Expense of Appealing to the Board of Equalization:
In the above example, you did the work yourself so you had no real out-of-pocket expenses. But you did have time involved. How much is your time worth? How much do you get paid per hour on your job? If you calculated the expense of your time what would your savings had been if you had won?
You also had to take a day off work to appear. Did you lose pay, or did you spend a vacation day or sick day? In any event it cost you money.
What if you had hired a professional appraiser? The appraisal would probably have cost you $250 or more, plus the appraisers time in appearing before the board. This expense alone would have been greater than your anticipated savings. To get a professional appraiser with a successful history at being an expert witness could cost you several times your anticipated savings.
The county does not have to worry about this expense. They way they look at it is they are paying their appraisers already and it really doesn’t matter if they are spending their time appraising properties or appearing before the board of equalization. What the county does not consider is that by reducing the number of appeals they could likely reduce the number of appraisers on staff.
Even with a professional appraiser you may not have faired any better. We have participated in discussions with equalization board members across the nation in which many have stated they have never voted to lower the county’s valuation based on an outside appraisal.
The Expense of State Court:
For a house, it is almost foolish for the average person to appeal the tax valuation to state court. If you have money to burn and want to fight out of principal, your efforts would be appreciated by almost all property tax payers. But for the average homeowner to risk thousands of dollars in attorney feels, expert witnesses and other expenses it just does not make good financial sense.
For an owner of an expensive property it can make sense. We have known property owners to spend tens of thousands of dollars and even more in an attempt to win property tax cases. In these cases they often win because to spend those dollars they have to be pretty certain of their case up front.
The Fear of Retribution:
This ought not come into play, but it does – especially for those with a high success rate against a particular county. Get a county appraiser mad at you or hurt their feelings and, even if you win, as soon as possible they will up their appraised value again. If you win in court and they can not raise the value on that particular property for a few years, if you own other property in the county they will raise those values instead. It costs them nothing to harass you, the tax payers pay for it and even pay them for their time. They might even get a promotion if they win! But it can cost you thousands.
What Can You Do?
Focus on Condition:
With your tax appeal you can often be much more successful if, instead of arguing the sales data, argue the condition of your property versus that of the comparables used by the county. You know your own property better than anyone, certainly better than the county appraiser knows it or knows the comparable sales they utilized to estimate your value with.
Take plenty of pictures of any problem that exists with your house. All houses have some issues, be it a crack in the foundation, a cracked driveway or walkway, worn floorcovering, peeling paint, steep driveway, a missing or curling shingle or two, a stained or worn countertop, sink or tub, or any of a host of issues which can be photographed.
Even your neighbor’s property can help you win your appeal. Take photographs of any problems which exist with the exterior of their property. After all, the appearance of their property affects the value of yours.
Photographs make great evidence, you can not take too many. Believe it or not, members of the equalization board are generally good people and would like to help others. But, they need something to go on. Photographs give them that something.
Look for Mistakes:
County appraisers are not perfect. Before appearing before the equalization board visit your county’s tax office and get all the information they have in your file or in their computer records about your house and each of the comparables they used in estimating it’s value. Carefully review these documents and look for mistakes.
The more mistakes you find the better you can discredit the opinion of the county appraiser in front of the equalization board. Do not reveal your findings to the county appraiser before the appeals board meeting, and at the meeting be very careful not to insult the county appraiser. You want to blindside the appraiser but do it in a way that they, or the equalization board, do not take offense. If the equalization board feels you are attacking the county appraiser they may come to his or her defense.
If you can discredit the county’s appraisal without your information being discredited the appeals board may have sufficient reason to side with you.
Remember the Key Date:
The value of every property in Georgia is estimated as of January 1st of the tax year. If your appeal does not come up until September of that year, do not appear before the equalization board with sales occurring that August. They will not consider them. You are better of with sales occurring the previous tax year, and you may be able to get by with sales closing in January or February of the tax year since they were probably under contract as of January 1st.
By the same token, don’t go in with sales a year or two old unless you have no choice. You need sales which occurred as close to the date of valuation as possible.
Arms-Length Transactions Only:
Be certain that all of the sales you use are arms-length. If Billy Bob sold his house to his aunt Wilma that sale is no good. Neither is the sale of a foreclosure or the sale in which any party is under duress.
I will not go into the definition of Market Value here, but, if possible restrict yourself to transactions handled by real estate agents and marketed through your local MLS. If possible, speak to the real estate agent and get all of the information you can.
Express Your Concerns:
Write your elected officials, both county and state, to let them know your opinion of the current system and any problems that you may encounter. For more on this topic you may want to read our free report How to Influence Local Politics.
Your vote counts. Pay close attention to the opinions of those seeking office. On a local basis it is often easy to make contact with those running for office and discuss the issues with them.
Fight Out of Principle:
If you can afford it, fight. A few wins by those determined to be taxed fairly helps us all.
Get on Your County Appraiser’s Good Side:
If you have one house this might not be worth the effort, but if you own multiple properties or a large property, it may be worth the effort. Make a point to discover the county appraiser’s interests. If they are involved with a charitable organization, support the local chapter of that organization. Be certain that the county appraiser is aware of your efforts.
What Not To Do.
Insult the Equalization Board, its Members, of the County Appraiser:
Be careful not to insult anyone. If you have disagreements handle them in such a manner as to be cordially convincing and insulting. Those insulted will work against you now and in the future.
Lose Your Temper:
This is probably one of the hardest for some to do. It is easy to get angry when you feel wronged. When you are angry you not always handle the situation in the best possible manner. Keep cool, treat it as a game not a life and death situation.
Personal Favors for the County Appraiser:
Gifts, loans, discounts and other gratuities for the county appraiser or his/ her family members are out of the question. Never even give the appearance of something like this.
If you are approached by the county appraiser for a favor, decline it gracefully, explaining to the county appraiser why you can not help them. Try to refer them to someone who can help them without putting you in jeopardy.
It’s Your Call.
It is up to you whether or not you appeal your property taxes. If the county’s value estimate is unfair, we hope you do. It will help us all.
The key to winning is to have strong evidence on your side. Without it, you will need to either point out problems with your property of which the county appraiser was unaware or discredit their appraisal.
One topic we intentionally did not cover was equalization: in other words, fairness. The county can not value your property for any more than they value other similar properties. A battle based on equalization is often even more of an uphill battle and would make a great topic for an article of its own.
Whatever you decide to do, good luck!