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Beware of the Contingent Only Tax Appealers or Re-Appraisers

Jul 12, 2008
Because the real estate market has had the largest decline since the Great Depression, the idea of getting tax re-appraisals for homeowners is spreading like wildfire! We commonly have people calling us asking how to get into the business. We always ask what they are expecting and where they are getting their experience to take on this important task on behalf of a property owner. Generally, the answer is that they have spoken to an appraiser or a buddy who did his own appeal, and they studied the "tax system" and know they can do it themselves. Some have not even understood that the tax assessed values are for the previous year, not the current market values.

We don't deny that these neophytes in the tax appeals area could possibly get some relief for homeowners, as the saying goes "even a blind squirrel can find a nut in winter", but the reality is that their services may not be in the very best interest of the property owners. For example, if a property owner gets a reduction of $500 by using a "contingent only" appealer with a low contingency fee, what may he have lost by not using a standard appeals service whose principals have been in the business for years. The answer is very simple; the property owner could be losing a tax refund of as much as 5 to 20 times or more than he received.

Any tax appealer (re-appraiser) has certain costs of doing his business, including but not limited to, his office overhead (assuming he isn't working out of his bedroom), telephone lines, office staff, evaluation services (expensive, not zillow, etc.), printing, photos, file preparation, advertising costs, driving to one to three appeals and waiting to be called, labor of three to fifteen employees, computer expenses, internet access, professional dues and expenses, and on and on!

The preparer who solicits a property owner and claims to have no fees except for a contingency of the recovered amount has forgotten that he will have all of the above overhead plus filing fees for each case. Let's assume that all of the above expenses average about $57.50 - $87.10 as a range for the industry. If the inexperienced appealer collects no initial fee to offset his "hard" costs, he quickly runs the risk of running out of time and money to process the applications. Unfortunately, this has been the case in the South Florida area where many appealers thought it was a great business idea but forgot the details of actually doing this highly detail-orientated trade where there are lots of up-front expense and time involved and a long wait for money back, if anything back at all if the process isn't done exactly right!

Let's examine a "typical" case. The property owner usually hears about the service by advertising (an expense), he contacts the appealer (telephone expense), and asks for the process (told by a office staffer " expense), who takes a basic application and payment (processing expense) and sends out an application and contract (mailing and printing and legal expense), if pictures or notary is needed (labor, notary fee, photo taking, labor and auto expenses), property appeal file is opened (labor and material expense), the case is reviewed and readied for appeal (one to three hours of labor and internet expense), case is hand filed (gas, auto, labor, application expense), case is set for review and presentation (drive to VAB - labor, parking and auto expense), wait sometimes for hours to be heard (labor expense), contact property owner (labor telephone expense), etc. Total time involved per case about 10 to 20 hours with no guarantee of recovery.

What has happened historically is that some new appealers realize that going to the appeal and the amount of work involved aren't worth the return if the property owner's refund is not in excess of $1,000 and the appealer's fee is only $250 - $300. Remember no matter how correct and precise the appeal, the VAB may approve the request but the tax appraiser could decline it! This is especially true in Palm Beach County, Florida where the current tax assessor is decidedly unfriendly to VAB appeals where property tax decisions are in favor of the property owners. The recourse is to go to a judicial hearing which will take another 10 hours of preparation, travel, presentation time and additional expenses.

So the real question is "Why wouldn't a property owner pay a professional tax appealer a small fee and a contingent fee to get back property taxes which he couldn't get or doesn't want to struggle getting himself?" The answer is simply that some property owners believe they can do it themselves and save some money. We look at the recoveries as "free" money the homeowner wouldn't" have had in the first place or so called "found money". So do yourself a favor and let a professional appeal service do the job for you.
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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