High property taxes got you down?

I’ve been a licensed appraiser for sixteen years. I appraised in Maryland, Washington, DC and Virginia until I moved back to the Buffalo, NY area about eleven years ago. Buying a home in the Buffalo area was a nice surprise when I found out that I could purchase a home almost three times larger than the home I owned in Maryland for the same price. Then the property tax situation was explained to me and reality came crashing down. My monthly mortgage (principle and interest $800), was going to be eight dollars less than the monthly taxes and insurance ($808) that I needed to pay (for a total payment of $1608). That means after thirty years of paying off a mortgage, I would still have to pay an equal amount per month for taxes and insurance for the rest of time I lived in the house. In effect I would have two mortgages for the price of one and that’s if taxes don’t go up. I believe taxes will continue to increase. As a matter of fact I do everything I can to make sure I pay the right amount of State, Federal and property tax. I own several income properties and have had the assessments reduced. I have challenged assessments for clients and have only lost one time. The property assessment challenge process is pretty straight forward at the beginning but gets more complicated at higher levels. I’ll write about that process in later blogs. Right now I’d like to write about topics that have been near and dear to my heart for some time…property taxes and statistics. I know what you’re thinking, get a hobby.

The National Taxpayer Union (NTU) located in Washington, DC is often quoted about the property taxes in the United States. They say that homes in the US are 30%-60% over assessed. They make this statement but I have never seen any statistics backing up the numbers. So, because of the property tax situation in NY and the fact that I have the Multiple Listing Service (MLS) I decided to see if I could prove or disprove the NTU’s statement in my little part of the country. It just so happens that Western and Central NY have the top six out of six highest taxed counties in the country when you compare home values to the amount of tax paid as a ratio (http://www.taxfoundation.org/taxdata/show/1888.html). I will check the sale prices of homes against the assessed value of those homes to see how accurate the local assessors are. This will be done at the town and city level and I will give an overall assessment for each county I research.

As an appraiser I know that nobody can predict exactly sale price of a home. Appraisers give an appraised value on a home but we realize that a range would be better. If I use the premise that 30-60% of all homes are over assessed then a home that sells for one dollar less than its assessed value is over assessed. That seems pretty ridiculous but it is the premise. So just to be fair I will check to see if the properties are over assessed and I will check to see if the properties fall within a range of +/- 10%. This means the local assessor has a 20% margin or range in which to value the property. I will post both sets of numbers on this blog.

Erie County is up first, let’s see what we have. We used single family residential homes that sold in the last six months. All homes that were estate sales, foreclosures, HUD homes, owned by a bank, homes less than $15,000 or otherwise not arms length transactions were not used. The information was taken from the local MLS and Realist taxes. The assessed information is entered into the MLS by real estate agents so random samples were taken and checked against the Realist tax information for accuracy. There were a small number of inaccuracies in assessed value but not enough to significantly change the outcome. We predict a +/- 4% error. If the local assessment equalization rate was not 100% we made the adjustment to the assessed value to bring it up to 100% of market value. A little over 3000 properties were used.

Town             Over                    Under                 Over by more       Under by more    City _____Assessed %      Assessed %        than 10%               than 10%            .

Alden                  40                            60                            20                            35

Amherst             37.6                         62                            16                             25

Aurora                30.7                         69                            17                              46

Boston                 28                            68.7                         18.7                           40.6

Brant                   28.5                         71                            14                               28.5

Buffalo                 30                            69                            22.5                           56

Cheektowaga      33.8                         65.8                         21                               40.6

Clarence               31.9                         65                            11.5                            30.6

Colden                   50                            50                            40                              30

Collins                    75                            25                            50                               16.6

Concord                 40                            60                            16                                40

Eden                       71                            28.5                         43                                 14

Elma                       42.4                         57.5                         21                                 42.4

Evans                     44.8                         55                            34.5                               41

Grand Island         32                            66                            11.9                                41.3

Hamburg                34                            66                            22.6                               34.5

Holland                   12.5                         87.5                         12.5                                50

Lancaster                21                            77                              8.5                                52

Lackawanna           48.2                         51.8                         18.5                                25.9

Marrilla                   62.5                         37.5                         37.5                                12.5

N. Collins                 22                            77.7                          11                                    56.5

Newstead                60                            40                            30                                    20

Orchard Park         43.5                         56.5                         20.8                                 26.9

Sardinia                   20                            80                            20                                     20

Tona. City               31.8                         68                            15.9                                   38.6

Tona. Town            30.7                         69.2                         15.9                                   50.9

W. Seneca               56                            43.2                         24.5                                      21

Wales                      63.6                         36.3                         36.3                                      18

Erie Co. Avg.      40.05%                  59.4%                   22.5%                                  34.05%

The NTU’s statement is true for Erie County NY. The County has 40.05% of its single family residential homes over assessed by one dollar or more. The County only has 22.53% of its homes over assessed when we give the assessors +/- 10% to work with.

The real surprise here is the fact that the county has roughly 60% of its homes under assessed by one dollar or more. That is a lot of money not being paid into the coffers. This tells me that the assessors and the home owners both need to work to find equilibrium. The home owners should make sure their home is assessed properly and not over assessed and the assessors should work to make sure homes are not under assessed.

If you are looking for more information on how to challenge your assessment go to LowerAssessment.com or make an appointment with your local assessor. See you next time when we look at Niagara County.

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3 Responses to High property taxes got you down?

  1. Matt says:

    This is vary detailed how did you come up with all the numbers for over assessed versus under assessed

    • Keith says:

      I have access to the multiple listing service and the property information for each County. I look up each towns information and place it in an excel spreadsheet. Next I adjust for the each towns equalization rate to come up with the 100% market value. Then I use the excel formulas to process all the data. I’ll be putting Niagara County up in the next day or so. Thanks for reading. Keith

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