When it comes to rising property assessments, it can pay to protest.
Two years ago – the last time county assessors reviewed home values – close to half of Denver property owners who protested their assessments got some relief.
This year, assessors along the Front Range are bracing for a big jump in appeals from property owners. That’s because most home appraisals are rising in the notices homeowners receive, even as a well-publicized real estate slump saps sales and prices.
“We have a basically eight-month period right now where sales may have dropped. These are not reflected in the values we are giving you,” said Doug Kamery, president of the Colorado Assessors’ Association.
Assessors across the state mailed out statements updating home values this month. Homeowners have until June 1 to challenge these valuations.
The disconnect between what people think their homes are worth and what counties say they are worth may be larger than at any time since the late 1980s.
Larimer County resident John Vancil was stunned when his notice of value arrived. The county assessor said his rural property’s value had risen from $297,000 to $470,000 in two years.
“There is no rhyme or reason to what they did,” he said. “I’ve lived here 15 years, and nothing has changed.”
Pearl Wall received a notice saying her 1954 home in Wheat Ridge was now valued at $234,000, a $12,000 increase. Given the sluggish home sales nearby, she had expected a decline. She got more upset when she learned the value of her neighbor’s home, built in 1996, dropped by $24,000.
And John Weimer paid $219,000 in October for a two-bedroom Capitol Hill condo the Denver assessor now values at $259,200.
“I found a bunch of units like mine that were selling for less,” he said, most for less than $200,000.
Vancil, Wall and Weimer are all convinced their homes can’t sell for anywhere near what the county assessors claim – not now and not as of June 30, 2006, Colorado’s appraisal date.
Protecting pocketbooks
Paying attention to those valuation notices is a pocketbook issue for consumers. Typically, a higher property value will trigger higher property taxes the following year.
“You have an opportunity to protest your value. You do not have an opportunity to protest your taxes,” said JoAnn Groff, property tax administrator with the Colorado Division of Property Taxation.
Denver County assessor Paul Jacobs thinks appeals could be up 25 percent to 50 percent in Denver this year from the 5,500 made two years ago.
Those 5,500 appeals represented about 2 percent of the total properties. Out of that total, the assessor adjusted 42 percent of them 3 percent lower on average.
Another 1,800 went on to the county board of equalization, which adjusted 15 percent of them lower by an average of 2.3 percent.
Another 743 went up to the State Board of Assessment Appeals, which sees about 3,000 cases every two years.
Short of appraising every home in person, there isn’t a foolproof method. Assessors rely on statistically complex models to generate mass assessments. Besides the usual items like square footage and number of rooms, some models account for things like nearby traffic and views.
They can’t account for things they don’t know about, like a flooded basement or a garage that collapsed in late December’s snowstorms.
Correcting a property’s value, in the end, falls to its owners.
“We don’t balk at appeals. Our goal is to get values correct,” said Toby Damisch, deputy assessor for Douglas County.
How close do assessors come?
Joel McDonald, owner of Benchmark Realty in Westminster, has compared home sales data to the values generated in automated systems. About 90 percent of the time, assessors are remarkably close, he found. When they are off, they can be way off.
McDonald has created an online tool to help metro-area homebuyers more precisely value their homes as they go to protest. It is available for free at automatedhomefinder.com/evaluation.
The issue hits close to home for McDonald, who plans to fight an assessment he believes overvalues his Westminster home by $20,000.
Although the Adams County assessor decreased its value from $300,000 two years ago to $285,000, McDonald thinks a more realistic value is closer to $265,000.
“There is no way it is worth the $285,000 they say it is worth,” he said.
In most counties, assessors plugged in comparable home sales information during a period stretching from Jan 1, 2005, to June 30, 2006.
State law permits assessors to go back in six-month increments for up to five years if comparable sales are limited, say in the case of commercial property in rural counties.
Assessors also have some discretion in throwing out transactions that they don’t consider legitimate.
That can eliminate inflated sales in which a buyer and seller conspired to cheat a lender. But it also eliminates foreclosures and short sales, in which a bank accepts a sale for less than what is owed on a mortgage.
Such “distressed” sales are becoming a bigger part of the overall total in metro Denver, accounting for more than half in some areas.
Even when foreclosures and short sales are excluded, over time they drive down home values in a neighborhood, and that gets captured in their calculations, assessors say.
Job turnover could also prove an issue this year. Of the state’s 64 assessors, 21 came in after the November election, Kamery said. In some counties, a change in leadership can result in a change in methodology.
The state does offer several checks on assessors. The Colorado Division of Property Taxation trains assessors and ensures they follow state guidelines.
The Colorado Board of Assessment Appeals and its trained appraisers hear cases from taxpayers when county officials won’t budge.
And the Colorado Legislative Council hires an independent auditor each year to make sure assessors are applying methods professionally and fairly, like not punishing political opponents.
So then what causes bumps like Vancil’s, who faces a 58 percent rise in the value of his home south of Berthoud?
Larimer County assessor Steve Miller said values haven’t appreciated over the past two years in unincorporated areas like where Vancil lives. In the case of Vancil’s house, the surrounding 4.5 acres of land and a large detached garage may be boosting his value.
“Sometimes, when the valuation of a property jumps significantly from one reappraisal to the next, it’s because the property had been undervalued before,” he said. “Sometimes it’s because the assessor simply goofed. Sometimes both factors come into place, which may be the case here.”
Assessors say property owners shouldn’t focus so much on the percentage change in a property’s value but how close the assessment gets to the market value of the home as of June 30.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
700 Washington St., #809
Denver
Square footage: 1,100
2-bedroom condo
Assessor’s value:
2007: $259,200
2005: $224,200
Percentage change: 15.6%
Zillow.com: $233,000
Owner’s estimate: $190,000 to $219,000
*Estimates are for the value of the home as of June 2006
Sources: Property owners, Zillow.com, automatedhomefinder.com/evaluation
