Saturday, November 17, 2012

Tax Valuation of Homes

Sometimes people wonder how the County values their property for tax purposes.  When you look at your tax bill it’s clear the County changes the valuation every year and I for one am pretty satisfied that the appraisal team from Sarasota and Charlotte Counties are doing a good solid and creditable job—but how do they do it?

Bill Furst at the Sarasota Appraisers Office is happy to speak at group meetings, and to share exactly how the valuation is established, and why his team makes changes every year.  I have some experience in this arena, I have often been asked to value homes, sometimes to estimate a probable sales price, sometimes for a bank or mortgage company which may be considering a foreclosure or extending a loan and wants to determine the value of this particular asset.

But the county gathers a huge amount of data. In fact, I was surprised at the amount of effort to achieve accuracy they go through. As you can imagine, they have tons of data on the homes they send tax bills to, obviously they know what the home was worth last year and if there was a recent sale, they have that information from the clerk of the court records, (this is the data that Realtors also use) but they have even more. They can access various databases, foreclosure records, and they actually send out questionnaires to all new property owners, looking for information and condition on the property.

Highest and best use information comes from the judicial opinions, land use regulations and the building codes and ordinances.  This data helps create actual value for vacant lots as well as rezoned homes.  A house that backs up to commercial property may not be very appealing to a buyer, unless it has recently been rezoned commercial—that would increase its value measurably.

Income information is collected from landlords, so rental income will provide one of the variables in a rate of return equation helping to determine the value of an apartment or condo building.

Florida statutes require that at lest every 5 years a representative from the Appraisers office must visit each and every home in the county.  Of course they can visit every year if they believe the characteristics of the property have changed.  Arial photography is one method of determining if an addition or a new swimming pool has been added to a home without the benefit of a permit.  Unusual sales prices also will bring out questions, like why did a house we thought was worth $200K sell for $350K? But when permits are pulled, the Appraiser has the obligation to come see what’s new.

As Furst makes clear, they do not come out to your house to change the records, but to verify that the records they have are accurate.  If the landowner will not allow the Appraiser into the house to verify his data, the Appraiser has the right and power to estimate what “might” be inside the home.  In my experience, these estimates come in much higher than what the homeowner would like, and the only way to get the data corrected is to request the appraiser come back.  This is time consuming and usually results in at least one big tax bill before the corrections are made, so dealing with the appraiser from the start makes the most sense.

Some of the assumptions that an appraiser (who was not allowed into a home) might make would include lots of tile, the kitchen is new granite, and fully updated, if there is a chimney, then there could be 2 or three fireplaces, and the home’s measurements might include additional square footage under A/C.  It’s better not to have to do all this twice.

Dane Hahn is a real estate professional practicing in Sarasota and Charlotte Counties.  You can reach him at dane.hahn@gmail.com or by phone at 941-681-0312.  See him on the web at www.danesellsflorida.com

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