New Philly Tax Assessments

The new assessment notices will be mailed out to property owners in Philadelphia beginning, today.  This will, no doubt, send many property owners into a state of shock when they see the new assessment value that has been place on their property by the Office of Property Assessment (OPA).  

My advice would be, don’t get upset just yet.  The reason being that despite the change in assessed value, no one is exactly sure how it will affect your taxes.  That’s because the new tax rate has not been established, yet.   So, when the new rates are voted on and set in place some property owners will see their taxes increase, while others may get out of this whole process relatively unscathed.

From what I was told in conversations I’ve had with folks at the OPA, is that property owners will have the opportunity to contest or disagree with their new assessments.

PhiladelphiaCityHallFirst, the property owner will have to submit a signed form to the OPA explaining why they feel their assessment is incorrect.  This will initiate a First Level Review, in which the OPA will look into the matter.  They will also send a letter of receipt to the property owner stating that a case has been opened.  Then, the property owner will be contacted by the OPA either with a phone call or a letter.  When their investigation is completed the OPA will notify the property owner of their findings/decision by mail.  Keep in mind that this is the first time this process will be used in Philadelphia.  So, you should be prepared for delays and lots of Philly-style red-tape.  The deadline for filing a First Level Review is March 31, 2013.

If the First Level Review is unfavorable for the property owner, the property owner can then file an appeal with the Board of Revision of Taxes (BRT).  This can be a very long process and will likely involve a hearing in front of the BRT.  If a property owner gets to this level, they should be prepared and have their documentation in order (appraisals, photos, floor plans, etc) and may even want to retain an attorney experienced with representing appeals in front of the BRT.

For more information on filing a Tax Assessment Appeal in Philadelphia or having an appraisal of your home completed to support your appeal please contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

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HELP! My Condo Shrank!

Last week, while looking at condo in Center City, the owner showed me a copy of her tax record which indicated that square footage of her unit was 3,155SF.  She was concerned because a previous appraisal stated that the unit was 2,678SF.  In her mind she was sold (and was paying taxes on) a unit that was 3,155SF.

As I measured the unit, I showed her my measurements and made the calculations in front of her.  I came up with 2,698SF, which supported the numbers from the first appraisal.

Then why did the developer, the agent who sold them the unit and the tax records all say that their unit was 3,155SF?  The answer is pretty simple. 

When calculating a unit’s square footage, developers and architects will typically include areas taken from the approximate centers exterior walls to the approximate centers of interior demising walls.  They will also include portions of perimeter walls, ducts, chases, beams and other concealed areas contained within the boundaries of the unit.  This can really add up, especially if the exterior walls are 1’ to 2’ thick like some of the older condo conversions in Philly.  To perpetuate the problem, the tax assessors will typically get the square footage for a unit from the developer or architect’s plans.

Appraisers tend to measure condo units from interior wall to interior wall.  We look at “useable interior living space”.  If you can’t stand on it, it’s generally not included in the Gross Living Area (GLA).  This method is consistent with guidelines published by Fannie Mae.

This can really pose a problem for appraisers when making comparisons to other units.  Often, we have to rely on the public records, condo plans or a developer’s website when researching comparable units.  Who is to say that the GLA reported in the records is representative of the unit’s “useable living space” or if it includes portions of exterior walls?  This is why it is so important for appraisers to know their market, intimately.  It is just as important for the appraiser to clearly explain and reconcile the inconsistencies in GLA; and make an adjustment when necessary and deemed reflective of the market.

This is also something that agents must be aware of, as well.  Make sure you educate your clients about possible discrepancies in reported square footage.  If your client thinks he’s buying a 1,200SF unit, you better be sure that’s what you’re selling.  The number one reason that agents are sued these days is for misrepresenting the size of the property.  If you’re not 100% sure that the square footage is correct, measure it yourself or hire an appraiser to measure it for you.

How would you feel if you paid around $1.5MM for a condo only to realize that its 457SF smaller than you were told?  What’s the big deal you might ask, it’s only 457SF?   Well, that’s a  21′ x 22′ room.   Assuming that at 3,155SF the price per square foot is $475/SF…that missing living space cost them approximately $217,075!   That’s another reason why using price fer square foot (the go-to method for many agents and developers when pricing units) is not a valid technique for valuing condos but, that’s a discussion for another day.

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The Coyle Group in the News!

On Sunday September 11, 2011, Alan J. Heavens the real estate writer for the Philadelphia Inquirer quoted our own Michael Coyle in an article titled On the House: Weighing a Pre-Listing Appraisal.  Heavens article explores the state of the current real estate market, pre-listing appraisals and the role of appraisal management companies. 

He also interviews a colleague of ours, Wes Costello, at Annie-Mac Home Mortgage in Mount Laurel, NJ.  Wes has some very interesting insights on the relationship between lenders and appraisers and how the emergence of appraisal management companies has weakened the appraisal process and made lending an even riskier venture. 

For the full story please visit this link:  On the House: Weighing a Pre-Listing Appraisal

 

 

 

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Philly Resumes Sheriff Sales

Today, April 5, 2011, the Philadelphia Sheriff’s office resumed the business of conducting sheriff sales of properties in the City that are behind in their mortgage payments and property tax liabilities.  An estimated 600-700 properties are on the block. 

Since just before Christmas 2010, the monthly sheriff sales have been postponed by order of Common Pleas Court President Judge Pamela Pryor Dembe.  This was done in order to allow homeowners enough time to apply for some of the $1 billion in federal assistance that is becoming available.  However, at the end of March 2011, Dembe ruled that the postponements must cease and the sales resume.   Even though the sheriff sales have commenced no deed will be issued to the buyer for 90 days in another effort to allow those foreclosed upon time to apply for the federal aid.

Despite protests and activists who plan to bid one penny (mainly symbolic) on the foreclosed properties in order give them back to the families who once owned them, the sales will take place. 

Keep in mind that many of these homes have sat vacant and neglected for months or years.  Many have significant repair and structural issues that must be addressed.  Others are not habitable for any number of reasons from infestation to lack of a central heating system.  Handing them over to owners who may not be in a position to maintain and repair the property is flat out irresponsible.  Doing so only perpetuates the cycle. 

While no one wants to see families displaced, this process needs to happen on order for real estate markets and economy to begin recovering.   It’s a painful but necessary step in order for neighborhoods to recuperate, as well.  Vacant and boarded up homes hurt neighborhood values.  These properties have to get back into the market and into the hands of qualified homeowners and investors who will repair them, live in them, resell them and add value to the affected areas. 

The Philadelphia Sheriff Sales are back for the foreseeable future.  This is a good thing.  It is a first step toward the path to a solid recovery for our streets, neighborhoods, communities, real estate markets and City.

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Mount Airy Trends

Being located in Erdenheim, just outside the city limits, we are frequently asked to appraise properties in northwestern Philadelphia, especially Chestnut Hill, Mount Airy, Roxborough and Manayunk. 

The other day we received our first question for the Ask PAB! section of the site.  It was submitted by a local agent who works primarily in the northwest section of Philly.  She typically deals with entry level and first time buyers.  For that segment of the market, Mount Airy offers a great selection of housing options for her clientele, in a wide range of price points and design styles.   It has very appealing housing stock, access to transportation, shopping, proximity to Center City and the suburbs and very unique community atmosphere.  Her question was simply:

 “How have Mt. Airy twins and rows been performing over the past couple of years?”

Below is a chart of the sales of 3-4 bedroom twins and rowhomes in Mt. Airy from January 2008 through December 2010.  Click on the chart to enlarge.

The blue dots indicate the sales of 3 bedroom homes; the red dots represent the 4 bedroom sales.  Our sample produced 341 sales of 3 bedrooms and 105 sales of 4 Bedroom homes, in Mt. Airy, during that time period.  The green and yellow lines depict the linear sale price trends for 3 and 4 bedroom houses, respectively.

The trend lines indicate that both 3 and 4 bedroom homes are moving downward.  However, it appears as though the 4 bedroom properties are experiencing a deeper shift that the 3 bedrooms, which are riding a flatter trend.  This is likely due to the fact that there are fewer 4 bedrooms homes and, as a result, fewer 4 bedroom sales.  With a smaller sample, it is easier for a few sales to influence the trend.  Conversely, with a greater number of samples it is less likely that a handful of sales to move the trend so dramatically.

If you have a question about real estate markets and trends in the Philadelphia region, please visit our Ask PAB! page to submit your inquiry.

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TReND Distressed Sales Report

TReND, the Multiple Listing Service that serves the Greater Philadelphia Markets, does a great job of publishing timely and relevant reports about real estate trends in the Philadelphia area.   Below is the report that they released this week showing the affect of Distressed Sales on the local markets.  TReND is always trying to improve their service and this is just another example of the new and innovative products that they offer.

Frankly, after reviewing the report, I was surprized to see that Philadelphia was lower in terms of distressed sales than some counties in New Jersey and Delaware.    But, it’s all relative to the total number of sales and, Philly, by far has the greatest volume of sales.

ThanksTReND!

Below is a link to the full report.  If, for some reason you can’t get to the report, let me know.

Distressed Sales: TREND Percentages Lower Than National Average. 

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Happy New Year 2011!

Happy New Year!

Now that the Holidays are behind us, we all can focus on making 2011 a year to remember, both personally and professionally.  At TCG, we will continue to offer you valualbe insights and advice about the greater Philadelphia real estate markets and information that you can really use.

This year we will expand our Listing Appraisal Services to include Philadelphia, Montgomery, Bucks, Delaware and all of  Chester County, in PA. We will also provide these services in Berks, Lehigh and Northampton counties.  In March, look for The Coyle Group to offer Listing Appraisals to real estate professionals and homeowners in New Jersey, as well.  So, if you are an agent or a homeowner who is looking for an objective, third party estimate of the value of your home in order to assist in Listing, we are here to help you.

In 2011, it is going to be more important than ever for Sellers and agents to price homes property.  Simply preparing a Comparative Market Analysis (CMA) it’s going to cut it in this challenging market.  Not only do you have to price the house to sell, you have to price it so it will appraise, too.  This step is vital if you’re going to maximize your profit and minimize the home’s time on the market.  Remember, homes that are priced correctly sell sooner and for more money than those whose pricing is “off”.

When selecting an appraiser to complete a Listing Appraisal you ask a few questions, first.  Appraisers often cover a relatively large geographic area, sometimes covering several counties.  This is not a bad thing; however, you need to make sure that the appraiser is familiar with your specific neighborhood/market.  Ask the appraiser how well they know your area?  how many appraisals have they done in your area?  how long have they been appraising in your area?  how long have they been certified?

All these questions are rather simple and if the appraiser is reluctant to answer them…move on!  There are other appraisers that would be more than happy to answer your questions.  If you are having trouble finding an appraiser there are several professional appraisal organizations that provide appraisers directories: Appraisal Institute and the Appraiser Subcommitte.

Once you’ve found an appraiser that you are comfortable with, then you should discuss the fee.  Typically, Listing Appraisals will be anywhere between $300-$400.  If the house is more complex, the fee may be higher…but get the pricing squared away prior to the appraisal inspection.

After inspecting the property, the appraiser will be able to deliver an appraisal report usually in a day or two.  Most appraisers can send the report via email as a PDF attachment.

Should you have any questions about Listing Appraisals, please feel free to contact our office.

Best wishes for 2011!

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The Lanesborough

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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The Roxborough Row

 

Philadelphia is known as a city of neighborhoods. When Philadelphians meet one another for the first time it’s not long before someone asks “what neighborhood are you from?”

Neighborhoods can be as small as a few square blocks or cover large sections of the city. One such neighborhood is the Roxborough section of Philadelphia. It occupies much of the northwestern portion of the City abutting Montgomery County, along with Manayunk and Chestnut Hill. It has always been a solid, working class area with strong family values and sensibilities.

The staple of the Roxborough housing stock is the three bedroom, single family attached rowhome or townhouse. Many were built to satisfy the housing needs of the local factory workers and to keep up with urban sprawl. Depending on which part of the Boro you are talking about the homes were generally built between 1865 and 1970. These are still very popular housing choices for first time homeowners and investors.

Below is a chart of the sales activity of the typical 3 bedroom Roxborough Row over the the past four quarters (2009 Q4 – 2010 Q3). As you can see, the number of sales spiked to 36 in 2010 Q2. This is a direct result of the tax credit that was being offered to first time homebuyers. The three bedroom Roxborough Row was essentially made for this program due to its attractiveness to first time buyers and those targeted buy the tax credit program. You will notice that in 2010 Q3, after the sunset of the credit, sales of the Rows dropped off by more than 60%, which was just where sales were prior to the credit program.

The next chart compares the Average and Median Sale Price for three bedroom Roxborough Rows over the same time period. In 2010 Q1, the Average Price spikes up to $271,042 despite only 12 sales during that quarter. The reason for the skewed average is two or three higher sales of newer townhouses that pulled the average up. Note that the Median Sale price tracks right along with the other quarters. The Median Sale Price for Roxborough Row has hovered between $204,900 in 2009 Q4 to a high of $214,500 in 2010 Q1. In 2010 Q2, the median began to settle into a more traditional trend eventually getting back down to $205,250 in 2010Q3…almost even with where it was in 2009Q4, prior to the tax credit.

It goes to show, that despite government interference with credits and incentives, the markets will correct themselves. It also goes to show that the Roxborough Row is the backbone of this market and can withstand outside market influences. Perhaps that’s why it’s been around for so long and continues to show consistent and measurable value.

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Chestnut Hill Luxury Market

Recently, The Coyle Group, LLC Real Estate Appraisers & Consultants completed an analysis of the Chestnut Hill Luxury Home Market from January 2000 to the present.

In our analysis, the Luxury Market was defined as the top 20% of single family homes sold in Chestnut Hill. Only sales listed in the MLS were part of the analysis. Private sales and sales occurring outside of the MLS listings were not included.

There were a total of 1,186 single family homes sold in Chestnut Hill since January 2000. This figure takes into account all price points. The top 20% (totaling 237 sales) were included in this analysis as the Luxury Market. Below is a graph of the sales activity that was tracked along with a trend line that illustrates the overall trend for the Chestnut Hill Luxury Market over the span of more than 9 years.

The bottom of this segment began at $675,000 and topped out at $3,300,000. The average sale price over the entire time period was $1,060,840, with a median sale price of $912,000.

One of the metrics that were tracked was the List Price to Sale Price Ratio. The cumulative average LP/SP ratio was 96.14%. This means that, on average, since January 2000, homes in the Chestnut Hill Luxury Market have been discounted approximately 4% from their most current asking price. The time period with the most full or over full price sales was between 2004 and 2007, totaling 53. The time period with the fewest full price sales was from January 2008 to the present. In that period, there were only 9 sales that went for full price.

Observing the trend line, the Chestnut Hill Luxury Market appears to be leveling out from the highs of 2006-2008 and more recent declines through the end of 2008 thru 2010. The trend even shows signs of incremental upward movement. This is positive news for this market. However, looking at the historical data the current market is roughly in line with the market from Spring 2005.

The Coyle Group, LLC is a group of professional Real Estate Appraisers and Consultants serving the Greater Philadelphia markets, including Chestnut Hill. For more information on our services such as Pre-Listing Appraisals, please contact our office at 215-836-5500 or visit our website www.thecoylegroupllc.com .

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