With a simple call or a quick form, a presumed “fixed” cost associated with home ownership need not be quite so fixed. Other than a refinance to address the loan terms, the other pillar of assumed fixed costs is real estate taxes. And unlike a refi, the cost of pursuing this option is a 44 cent stamp and a few minutes of your time.
For the first time, I really looked at my bill and then the town’s on-line assessment database. I was surprised to learn that the taxes were based on an assessed value about $20,000 more than the current listing price I had on my property ‘” a price at which I was unable to sell! Most towns and cities have their assessment data bases on-line and all the data you need is just a couple clicks away. A simple Google search should bring you to your town’s site.
I assumed the tax assessment process would be confusing and mired in bureaucratic red tape. In reality, it was far simpler. After consulting the town’s website and downloading the form, I simply had to state what I felt the assessed value should be and why. My rational was simple: this property had been actively marketed for an extended period of time at a value $20,000 below the current assessed value. Given the current market and diligent efforts to sell, it was clearly over-valued. I filled out the form and mailed it in.
Though the response was not exactly what I suggested for the new valuation, it was significantly less than it had been. It was so quick and easy, I repeated the process with an additional rental property as well as my own residence. Some municipalities have a more complex process, but assuming so is a big mistake. It takes only a few minutes to find out and could save you big bucks.
It has become increasing common to see real estate advertisements for properties being sold “Well Below Assessed Value”. “Well Below Assessed Value” is simply another way of saying “Taxed Way Beyond Its Current Worth”.
But therein lies the problem ‘” the difference between assessed and appraised and the tendency for most homeowners to utilize them interchangeably. Appraised value is what an independent professional determined the home to be worth in the current market- taking into consideration recent sales, listings, etc. It is done sporadically ‘” generally at the time of applying for a mortgage. Assessed value is generally determined on a regular basis by a municipality, sometimes as infrequently as once per decade. It is used as the basis for determining a town’s total valuation and therefore the necessary tax rate to meet its obligations.
In determining the value, the town considers all data available on your property and may send out representatives to document specific features. Appraisals can be incorrect for a variety of reasons. The most common is just simply incorrect factual information ‘” the number of beds/baths, the square footage, property features, etc. In my case, these minor inaccuracies only strengthened my over assessment contention. I didn’t have a fireplace or hard wood floors — all things the town had assumed when determining the value.
If you intend to stay in your home and cannot point to an unsuccessful list price as justification for a lower valuation, there are plenty of other resources to help you prove your case. Starting with Zillow.com, Trulia.com, Realtor.com and your town’s database are all ways to provide factual data that shows your home is worth less than the town previously determined. Cite recent sales in your neighborhood and compare the features of those properties with yours. Always remember it is a fact-driven process, not an emotional one.
It is not in a town’s interest to make the process simple or to encourage property owners to contest their valuation. But by putting aside assumptions and focusing a few minutes of research, I was able to successfully drop the town’s valuation of my property and lower my tax bill, all the while making it more attractive to investors who know that a lower valuation simply means lower ownership costs.