Everyone hates paying more taxes than necessary. Real estate brokers and agents can use property tax bills as an excellent opportunity to reconnect with their clients and remind them of the great service they provide, as well as help find new business.
Many of today’s real estate professionals are clueless about the mechanics of property taxation. But they shouldn’t be. It is an important part of the industry and another knowledge set that a skilled agent should possess. It can be a lasting added-value service to their clients and aid in maintaining repeat business.
The agent’s critical role in assisting property owners is in knowing the process and the real valuation of the property, as well as being able to prove it with good comparable sales (these comps will be from some past period, not current comps).
That takes good historic MLS data. Data from Zillow just isn’t enough. It takes accurate knowledge of the sales, properties and neighborhoods.
Every property owner has the right to request a review or appeal their property tax assessment. It might seem overwhelming, but with a little knowledge and some assistance from a reliable local agent, it is quite easy. I have saved clients hundreds of dollars per month on their tax payments — and they are grateful.
But it is also a perfect opportunity to reconnect with past clients and establish yourself as a true service professional with potential new customers. It is the chance to have mature real estate discussions about values and trends with potential sellers and buyers.
It is all about capturing leads and keeping you out in front as the neighborhood professional.
So, here is the opportunity: The county tax assessor and State Board of Equalization have a mandate to generate revenue via property taxation. Without casting blame, sometimes they are a little overzealous in the property assessments.
Sometimes the county appraisers just aren’t as proficient at valuations as local agents. They can easily err on the up side. Many property owners see their tax increases and just accept them without question because they don’t know for sure, and everybody likes to think their value is going up.
In California, there is a rather simple appeals process. First, the property owner can contact the assessor’s office and request a revaluation or assessment review, which is a good time to be armed with good comparable sales. If that review is unsuccessful and the owner still feels overassessed, they can make a formal appeal.
To make a formal appeal, the property owner has to complete a short form and state their opinion of value and provide three comparable sales to substantiate that value.
At this point, the agent becomes invaluable by producing three sales “comps” that can be attached to the appeal. Assuming the data is correct, the property owner can be well on his way to a successful appeal and a more accurate assessment.
In order to have a real intelligent conversation with any property owner, brokers and agents should familiarize themselves with the specific county’s appeals process and forms (there are specific time frames for filing appeals, usually the beginning of July to the end of November). Go to the assessor’s page of the local county’s website and take a little time to understand the process. Call the local assessor’s office for any clarification.
In California, the property tax laws and rules are voluminous and onerous. But a little understanding of the basic rules, of Proposition 13 and Proposition 8, and it is rather simple (this should be part of any professional’s knowledge base). Many times the agent’s themselves find they might have valid appeals.
In California, today’s excessive assessments are usually from high valuations lingering from the mid-2000s and not reduced over time via “Proposition 8” reductions, or the “automatic” 2 percent increases that aren’t warranted and are debatable. The roller coaster of values in the past 15 years has created many dubious assessments.
Some insider hints for property owners making appeals:
Be polite with anyone you speak to at the assessor’s office, but be sure to get a name (write it down) and ascertain they are the lead person on any assessment review or appeal. If not, who will be? Make them accountable. I find that though these appraisers work hard at valuations, the local agents have the edge because they have been in the properties, and they know the real condition and the detailed valuation adjustments. Again: Having good comps at the preliminary assessment review is good. Having them for a formal appeal is critical.
If an owner does file a formal appeal, few appeals actually go to a formal appeals hearing. Hearings are simply too costly in time and money for the county. Especially for smaller residential properties. That is why filing an appeal is an almost “no-lose” situation for owners. In a hearing for residential properties, the burden of proof is normally on the assessor.
There is usually some sort of settlement (stipulation). The county might “negotiate” right up to the time of the scheduled hearing. An owner should always be ready to settle. There is no reason to get greedy.
Remember also that assessments are backward-looking. It is important that everybody understands the appropriate time frame for the assessed value. In California, understanding the basic mechanics of Proposition 13 and Proposition 8 is paramount.
Here’s another hint for owners: Even if a specific review or appeal goes nowhere, it puts the assessor on notice that the property owner is proactively watching their property tax assessment and will not hesitate to question it. That itself could save the owner money in the future.
So, here are three ways brokers and agents can make the property tax topic a business and lead generator:
1. Include a prompt for this service on any mailings and personal website or advertising (or however regularly you get in touch with your clients). It is a great conversation starter. You can provide links to the appropriate pages on the assessor’s portion of the county’s website to explain the review and appeal process. Providing owners with the comparable sales data is key. Obviously, your level of involvement is as time allows, and this can also be a great task to assign to a team member. It never hurts anyone in the business to have the knowledge of comparable sales in the local market.
2. Occasionally review your past clients’ current assessments and see if it is in the range of what is reasonable. If not, then send them something specific (an email or phone call) and ask them if they would consider requesting a review or filing an appeal. Let them know you can help them. Even if it appears OK, a mere mention that you reviewed it for them is worth a short conversation to remind them of your exceptional level of service.
3. Paying attention to assessed values while perusing property data can also trigger “red flags” of excessive assessment. The more familiar the process becomes to an agent the quicker one can detect these. It is a valuable little expertise and a door opener. More common inquiries can typically be dealt with rather quickly with modern property tax databases and knowledge of the local market.
With some owners, you might have the opportunity to be a “star” by helping them and saving them money. Other clients will be reminded that you are a knowledgeable real estate professional and there to provide great service. (I love being able to tell my clients, “Your assessment is fine, but your neighbor’s is way too high.” Hint, hint.)
In the meantime, this knowledge is just one more skill that gives brokers and agents the opportunity to have advanced real estate discussions with property owners who might be sellers now or in the future. Or likewise impress potential buyers in the marketplace, and that isn’t so taxing.
Paul Oster is broker-owner of Re/Max of Mammoth, has held public office in both planning and tax appeal, and is author of www.MammothRealEstateBlog.com and www.PaulOsterRealEstate.com.
