pab - Philly Appraisal Blog - The Coyle Group
Philly Appraisal Blog from The Coyle Group
Appealing your tax assessment can be very appealing! One homeowner that we worked with this past September found this out first hand. He received a 43% reduction in his overall assessment. How does that translate into actual tax savings, you might ask?
Well, in this case the house was located in Landenberg, in southern part of Chester County. This area has seen some pretty steep declines from the highs of 2005-2007, especially in the luxury home market. The house was newer and was assessed at $532,770. The Assessed Market Value (AMV) of the home was $951,375. That means that they were being taxed as if the current value of their home was equal to the AMV amount. Their annual taxes were in the neighborhood of $16,200 (ouch!)
Our appraisal of the house and determined the actual current fair market value to be more like $545,000. At the hearing, we were able to demonstrate that our appraised value was indeed the correct value for the property. The Board of Assessment issued a reduction of assessment based on the appraised value.
In the end, this particular homeowner saved $6,966 off their property taxes. That’s a nice chunk of change! While results like this are not the norm, it is not uncommon for property owners to save 12-25%. Depending on their particular property tax burden the savings can really add up!
The bottom line is…if you don’t ask you don’t receive when it comes to appealing your assessment. It is up to the property owner to initiate the appeal and to demonstrate that the assessment is incorrect. Homeowners: it is in your best interest to figure out if your assessment is incorrect. Real Estate Professionals: it is in your best interest to help your past and present clients do the same.
If you have any questions about property tax appeal or other value related topic, please feel free to call us at 215-836-5500 or email at appraisals@coyleappraisals.com
A property owner in Whitpain Township contacted our office about doing an appraisal of his property for tax assessment appeal. As we do with all of our assessment appeal clients, we ran the public records on the property and searched for any prior MLS data on the house. This gives us a preliminary understanding of the property.
In this case, the house was a 5 year old 1 story rancher. Not very common in this particular market where 2 story colonials are the norm. The public records indicated that the house was over 5,100 square feet…large for a rancher. Digging a little deeper we found that 2,000 square feet of the listed gross living area (GLA) was contained in the finished basement.
Why does that matter you may ask? Well, from an appraisal perspective, below grade living space is generally not valued the same as above grade living space; nor, is below grade living space included in the overall GLA calculations. So, again from an appraisal perspective, the actual above grade GLA for the property is really about 3,100SF with 2,000 of finished basement.
This matters when an appraiser is reporting the Fair Market Value (FMV) of a property. FMV is the basis for a property’s assessment.
While an assessor, for the purpose of assessment, may value below grade living space the same as above grade space, an appraiser does not. The reason being is that when appraising for FMV the appraiser takes into consideration the actions, preferences and trends within a given market. In this case, Buyers within this market will generally not value below grade living space (no matter how nice) the same way they would value above grade living space. For example, Buyers might be willing to pay $125 per square foot for above grade space but only $50 per square foot for finished basement space.
The property we were looking at had an Assessed Market Value of $889,300. They were being taxed as if their home was worth $889,300! Their annual taxes were in excess of $14,000. That’s a lot for a modest rancher.
Our initial search of recent sales showed no sales of 1 story ranchers in the prior 12 and 24 month periods. So, we expanded our search to include any and all sales within the subject’s municipality and school district. What we found was that the average sale in the prior 12 months of all homes in this area was right around $600,000. Keep in mind that these sales are all 2 story colonials, some much larger than our rancher. Without having done an appraisal of the property and only using broad averages of the market we were able to present the following scenario to the property owner.
If the property were to appraise at the market average of $600,000 and this amount was agreed to at the assessment hearing, the homeowner could potentially reduce their assessment by 32.5%. They would save approximately $4,550 per year in taxes! Keep in mind that the average is based on available 2 story colonial sales. Chances are that the actual appraised value of the rancher may be less than the average resulting in a deeper assessment reduction.
So as tax appeal season approaches property owners should take a good look at their assessments and the public data available on their property. They should check for errors in the public records, especially incorrect square footage, room count and exterior features such as pools. These are often incorrect in the public records and, if left unchecked, could greatly affect your assessment and tax burden.
Real estate agents and other professionals that work with property owners, now is a great opportunity for you to offer a value added service to your past, present and potential clients. Offer to conduct a review of their assessment card and public records. If you notice something out of the ordinary you can bring this to their attention and instruct them on how to proceed.
If anyone has any questions about their assessments or how to proceed with a tax assessment appeal, please feel free to contact our office at 215.836.5500 or email appraisals@coyleappraisals.com .
Just the other day, I received a phone call from a Mortgage Broker friend of mine. Yes, appraisers and Mortgage Brokers are still allowed to be friends.
He wanted my input on a situation in which one of his former clients found themselves. Let’s call them the Utley’s. (For the privacy of the parties involved, I will not use the actual names, streets, pricing or house photo in this post.) The Utley’s currently have their home listed for sale in Springfield Township, Montgomery County for $345,900. There home has been on the market for 39 days and they have an offer on the table for $339,000. The Utley’s are concerned about whether or not they should accept an offer this “low”.
I began buy pulling up the information on the Utley’s home in the MLS and public records. It is a nice 1939 colonial with three bedrooms, 1.5 baths, approximately 1,500 Sq.Ft. A very common home in this area.
Then, I took a look at the sales and listing activity in the immediate area for similar homes. What I found was surprising. The last three sales in the neighborhood in the past year sold for $370,000, $370, 000 and $412,000. There are currently two competing listings in the neighborhood listed for $370,000 and $469,900. The home listed at $469,900 was a larger, four bedroom that was completely renovated, probably not the best comparable.
However, there was also one pending sale right around the corner from the Utley’s. This house was last listed for $339,900 but, it lacked a powder room and was roughly 220 Sq.Ft. smaller. It had also been on the market for over 160 days with an original list price of $364,000.
After looking at this information, my question to my Mortgage Broker friend was “why did they list it so low?”
By listing at $345,900, the Utley’s are basically telling the market “Hey, this is my pie-in-the-sky, hope I can get it number…but, I am probably willing to take less!” The reason they are receiving “low” offers is because they apparently under listed their home, based on available market data. They (and their agent) may have shot themselves in the foot.
To compound the issue, it turns out, the Utley’s agent is a “friend of the family” (probably not for much longer after this experience) that is a licensed agent but, who is not very familiar with their neighborhood. In the end, the Utley’s may be leaving thousands of dollars on the table or may have to re-list at a higher price.
This is a perfect example of why Sellers and Agents need to have a Pre-Listing Appraisal completed prior to listing a property. A Pre-Listing appraisal can assist Sellers and their Agents maximize their selling price without over or under pricing. If the Utley’s and their Agent had an appraisal of the home done prior to listing they might have developed a different price point and might not be in a situation where they are entertaining such “low” offers.
For information on The Coyle Group’s Pre-Listing Appraisal services, please call our office at 215.836.5500 or visit this link.
We’ve received a number of calls from real estate agents in the Philadelphia market, including Montgomery, Bucks, Delaware and Chester Counties who have been inquiring about our Listing Appraisal Service. Many have asked to see some case studies. We thought it was a great idea and will be posting Listing Appraisal case studies from time to time.
Our first Listing Appraisal Case Study involves a house located in the popular Manayunk section of northwest Philadelphia.
The agent called The Coyle Group to help revise the list price for the house. It had been on the market for over 150 days and the showings had pretty much stopped. The agent was hoping that an objective appraisal might help convince the Seller to lower the price to be more competitive and hopefully get the house sold.
One of our certified appraisers inspected the house, researched the market and prepared a report for the agent and Seller. The appraisal results indicted that the house was priced about 7% higher than comparables homes in the area. It wasn’t competing.The Seller lowered the price and the showings picked up, again. The house was under contract within 10 days of the price change. The contract price was within $2,000 of our appraised value.
To find out how TCG can help you with your listings visit our Listing Appraisals page
Purchase Decision – The Lanesborough, Rittenhouse Square, Philadelphia
This was an interesting appraisal assignment. We were contacted by a perspective Buyer to help determine whether or not he was going to purchase the condo unit that he was currently renting. The unit was located on one of the upper floors in the landmark Lanesborough Building in the Rittenhouse Square section, of Philadelphia.
The Lanesborourgh is a luxury residential condo conversion of a classic 1929 building. It is a very exclusive building with direct elevator access into each unit and only one unit per floor. Units are valued in the millions of dollars. Personally, I think that it is one of the most elegant buildings in the Rittenhouse Square market.
Due to the limited number of units in the building, there were no recent sales to analyze. The most recent sales in the building were between 16 and 24 months old. But there were two listings in the building.
In developing our appraisal, we looked at current market sales and listings within the immediate Rittenhouse Square market. We focused our search for comparables to included units with similar square footage and amenities, as well as intangibles such as building prestige.
What we were able to find was that there was a market for a unit like the subject. We also found two current comparables from competing buildings that sold previously, in-and-around the same time as the most recent Lanesborough sales. This allowed us to see how the Lanesborough sales competed with comparable market sales, in Philly, at that time. By looking at the relationship of the prior Lanesborough values to the comparables back then, we were able to draw correlations and projections to the current values. The listings in the subject building and competing buildings also gave us indications as to the market trends over recent years.
In the end, we were able to present our client with a well researched appraisal that aided in his decision whether or not ownership in the prestigious Philadelphia building was right for him.
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