Your Tax Assessment

Recently, I was on a listing appointment with a home owner who had been in their home for 20 years. Looking at their public record I noticed that their tax assessment was way over assessed based on the comparable properties in their neighborhood. They were paying about $200 more a month than the comparable neighbors. My client was very upset to hear this because we calculated that this had been going on every since he bought the house. He had overpaid property taxes for 20 years costing him thousands of dollars. He never knew and never thought to check. Unfortunately this was lost money now.

Every home is assessed at a certain value by the county based on the public data that exists on the house. Since the county is doing this for thousands of homes, it is bound to make mistakes and they do. In fact, when I bought my current home I noticed the tax assessment was too high and so I appealed the assessment to the county and they agreed and lowered my tax bill. So what's the process?

By now, you probably have received your 2009 tax assessment. It's important to look at your assessment and compare it to your neighbors. This is public information and is listed on most county websites. I'm more than happy to provide this information for you if you email or call me.

If you'd like to research it yourself, I'm providing you the with this information below. It will help you analyze your assessment and if need be how to appeal your assessment.

Below is information about real estate assessments and how a homeowner can appeal your locality’s assessment of your home or property. It should be noted that each locality follows slightly different procedures for determining real estate assessments, reviewing appeals, and determining eligibility for tax relief.

FAQ's about assessments:

1. What is a real estate assessment?

All assessments of real property, including land and permanently affixed structures, are based on fair market value and are equitable with the assessments of comparable properties. Title 58.1-3201 of the Code of Virginia provides for the assessment of real property at 100% of fair market value. Fair market value is the probable amount a property would sell for today if exposed to the market for a reasonable period of time.

2. Who assesses the property and how is property value determined?

Each locality has an assessor who estimates the value of the property. The assessed value of property is part of the equation that determines how much a homeowner pays in real estate taxes. The assessor does not determine the local tax rate. The assessor determines the value of a homeowner’s property by looking at the physical characteristics like square footage of land and improvements made to the structure like adding a garage. Another factor the assessor uses to determine value is location of the property. It is important to remember that the assessment is an estimation of value that is determined through sales, income, or cost data. Sometimes an individual appraisal is necessary if properties cannot be analyzed through mass appraisal.

3. What causes real estate assessments to increase or decrease?

There are a variety of reasons that can result in an increase or decrease. Some include: changes in economic conditions; changes in the property such as structural damage or additions like a new bedroom or garage; land divisions; and re-zonings.

4. How does the assessment affect what I pay in property taxes?

Real estate taxes are calculated by multiplying the property’s assessed value by the real estate tax rate. The real estate tax rate is determined locally.

5. What is the difference between sales price, appraisals, and assessments?

Sale price is the price a buyer pays for a particular property. An appraisal is a detailed single property valuation and a private appraisal may be obtained any time throughout the year. Appraisals have a variety of purposes, for example, mortgage loan, sale, home equity loan, and estate valuations. An assessment is a mass appraisal of property for tax purposes. Assessments are based on large numbers of sales that are analyzed to determine values for large groups of similar properties.

The Appeals Process

There are three main reasons that you may want to appeal your assessment:

1. 1. Your locality has the wrong information about items that affect property value, such as number of bathrooms or square footage or a new structure like a garage.
2. 2. Your assessment is too high based on evidence you have that similar properties in the area have sold for less than the estimated market value of your property.
3. 3. Your assessment is fair and accurate, but higher than similar properties in the area therefore making your assessment unbalanced.

How to Appeal

Gather information

• *Be sure you understand the deadlines and procedures for making an appeal; instructions should be on your assessment notice.
• *Research what your local real estate assessment office has on record about your property. I'm happy to help you get this information if you'd like.
• *Compare your assessment to the price that similar size homes in your area have sold for to see if they are comparable.

Evaluate

• *Review and evaluate the data you have collected; you may find that your assessment is on target.

Review and Appeals

• *If you wish to proceed with the review and appeals process, follow the instructions given by your locality. The first step may include a review by your local real estate assessment office. If a dispute still exists after the review, you may appeal to the Board of Equalization and Assessment Review. The Board is appointed locally and it has the power to increase your assessment as well as decrease it.

Your Local Assessment Information

* Fairfax County Assessment Website

* Loudoun County Assessment Website

* Prince William County Assessment Website

* Arlington Assessment Website

* Alexandria Assessment Website

* Fairfax City Assessment Website

* Falls Church Assessment Website

* Manassas Assessment Website

Why Should I Buy Now?

"When people get greedy, I get fearful. When people get fearful, I get greedy." Warren Buffett

I don't know about you, but I like to listen to, watch, and learn from other successful people.

When the market is strong, people's purchases quickly increase in value, which can lead to euphoria, which can lead to rash decision making, which can lead to greed. At the height of the market real estate professionals saw lots of greed. Many sellers were being very greedy trying to get as much as they could for their homes even when profits were at crazy numbers. People all wanted in on the real estate boom which drove the euphoria, rash decision making, and greed.

When the culture is going one way, that is the exact time to go the opposite way . If this is true, then now is the time to buy real estate. People are fearful about the economy and the real estate market and as Warren Buffett says, when people are fearful he gets greedy. When people are fearful the natural tendency is to become fearful. This causes prices to drop drastically and the government to respond with programs to stimulate the market.

The point of maximum risk for any investment or purchase is during the euphoria state. From this euphoria (the height) starts a downward cycle. As prices start to fall, buyers go into denial which turns into fear, followed by panic, despondency, and even depression.

The point of maximum opportunity is at this lowest point, between despondency and depression. This is really what Warren Buffett means when he says he gets greedy when others get fearful. This is the point of maximum opportunity. Well guess what, we are at the point of maximum opportunity in real estate.

This point won't last long. History proves that once we reach this point it is followed by hope and then optimism and the cycle starts back up again. We are now seeing these signs of hope and optimism in the real estate market with first time home buyers and investors. All across Northern Virginia, we are experiencing multiple contracts on prices below $350,000.

With low home prices and historically low interest rates people are realizing that now is a great time to buy. As we saw in my last blog, the number of homes for sale continues to drop (low home inventory). Currently, we have around 8000 homes for sale in Northern Virginia and that compares to over 16,000 at this time last year. If this trend continues, prices will rise and there are some areas where prices have already started to rise.

Successful investors know not to follow the crowd because the crowd doesn't know where they are going. Most of the crowd is fearful right now so take the advice of Warren Buffett and take advantage of the opportunity that their fear presents. The time to buy is now.