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Why Would a Real Estate Investor Be Helpful in a Property Tax Appeal?

Jul 12, 2008
Property tax appeals are successful based on an adjustment of the tax assessed value of the property in question. Whether this property is a commercial property or a homeowner's homesteaded house, there is a basis for an adjustment of its value based on the condition of the property and other pertinent factors.

Real estate investors traditionally have bought distressed properties, fixed them and resold them at full market value. This process has revitalized many neighborhoods and created wealth for everyone involved including all the neighbors. These investors take the risk of losing money from a declining real estate market, having holding costs and rehabbing costs exceed their expectation, and being unable to find a buyer at their break-even cost.

Investors quickly gain a sense of what is wrong with a property and the cost to fix it quickly and efficiently which is critical for ultimately making a profit. If they don't "get it" they will be bleeding money in no time at all. Investors who take on huge rehabs should approach their tax appraiser immediately for tax relief through re-appraisal. If the period for application has expired, there are ways to appeal the process.

This experience and knowledge of the repairs needed and the comparison of other houses in the neighborhood are the essential human tools for re-appraising a property for the tax-appraiser. When investors make their presentation to the homeowner to buy the property, they go into detail about the properties deficiencies that reduce its resale value. Again these are generally the same deficiencies that the tax assessor is unable to see from his office and may significantly reduce the tax assessed value.

For example, these deficiencies can be: structural, code violations that must be remedied before a certificate of occupancy can be issued, the structure is in such poor condition it should be demolished, property needs major mechanical systems (roof, HVAC, electrical, plumbing, septic or sewer system, etc.), boundary disputes, title deficiencies or deed covenants, traffic patterns or changes in them, noise abatement issues, proximity to "nuisances", and many, many more deal-breaker problems that investors face on almost every deal they look at.

Therefore, investors have a learned sense of what is wrong with a property and what needs to be fixed to bring it up to par with the properties in the neighborhood to make it able to sell. This business savvy can be gained by hiring a contract, appraiser, home inspection company, roofer, plumber, electrician or other tradesman for each property their review. The simpler answer, and the way the investors learn themselves is to just do it and make mistakes, and sometimes early in their careers, they make very costly ones!

These deficiencies in the properties are what make the profits for the investor if they rehab them. These same deficiencies are what "depreciate" the tax assessed value of these properties. So, who is better qualified than a competent investor-rehabber to analyze the inflated value of a property? If your professional tax appealer doesn't have at least a few investors as well as competent appraisers, look for another service so you don't lose valuable time with a firm that doesn't have the same "street smarts".
About the Author
Dave Dinkel is the President of Homeowners United, Inc. which is an advocacy group dedicated to helping property owners in every way possible. For more information and a free e-book detailing the tax appellate system, go to www.moneybacktoyou.com
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