During the first week of ever third year, you will receive your brand new property tax assessment. This year the lucky third of Harford Countians are in the Route 40 corridor. I would imagine the assessments will be totally out of sync with current market conditions.
According to a recent article in The Aegis, the Maryland Department of Assessment and Taxation indicates the average assessment increased approximately 5 percent for residential properties and 23.4 percent for commercial real estate. How could this happen when everyone knows values are dropping?
First, you have to understand the assessment process. They don't use the same methods appraisers like myself use. I appraise one house at a time. I go into each house, look at the inside of the property, find out what upgrades and improvements were made or are necessary. A good appraiser is doing one perhaps two per day. The assessment office is estimating the value of over 35,000 houses every year. You would need a hundred assessors to do it the same way. The local office has a handful of people on staff. Also, would you want the tax man to enter your house and look around?
To assess tens of thousands of house, they use a method known as mass appraising. They analyze average costs per square foot and they also look at comparable sales in the area. In my 25 years in real estate, it has been my experience that the assessments are usually lower than real market value. The problem this year is that the market changed significantly after they analyzed the sales. The market absolutely cratered in the last quarter of 2008. To be fair to the tax man, there is no way they can be that up to date with the vast numbers of properties they are assessing. It's just physically impossible.
So what happens when you get your assessment and you think it is too high? The state already provides a process for appeal. For new reassessments, you simply send in an appeal form within 45 days. (This would put the deadline around mid-February.) You can either meet in person with the assessor or they will do a telephone meeting if you can't take time from work.
I did this several years ago with a rental property I had in Baltimore City. The tax assessor really jacked up my taxes unfairly so I appealed. I met with the assessor in is little office. It was very informal and relaxed. I simply sat down with the assessor showed him all of the recent comparable sales in the immediate area and politely asked for him to reconsider. Within a few weeks I received a letter from the assessment office stating they were reducing my assessment. They met me about half way. To me, this was a success.
The point of telling you this story is to give you some advice on how to handle the assessor. If you go in with "guns a blazin," you will make the assessor very defensive and likely he will dig in his heels. If you really want the desired results, you need to be armed with information and use reason and logic. You have to help him save face. Let him know that you understand the challenges he faces. Provide good comparable sales data or consider providing an unbiased, professional appraisal.
A typical appraisal will cost you $350. For assessment appeals, I would provide a summary report instead a full blown lender-style appraisal for less. You would need to call for a quote since I need to know what type of house I am dealing with. Depending on the amount of decrease, it may be worth the cost. The Harford County tax rate is $1.08 per thousand of assessed value. To break even, the assessment would have to be reduced $32,400 or $11,000 per year if it is phased in. After talking with you, I'll tell you if it is worth it. I am not going to do an appraisal for you if I don't think it will help you.
Use this link to find out more about the appeal process and downloads to necessary forms: http://www.dat.stat.md.us/sdatweb/appeal.html